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Tournament Incentives and Contestant Heterogeneity: Empirical Evidence from the Organizational Practice

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Author Info
Uschi Backes-Gellner () (Institute for Strategy and Business Economics, University of Zurich)
Kerstin Pull (Eberhard Karls Universitaet Tuebingen)

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Abstract

Whereas the theoretical literature on organizational reward systems repeatedly points to the importance of tournament models from an efficiency perspective, very few is known about the application and effectiveness of tournament compensation in organizations, especially when contestant heterogeneity is taken into account. While the distorting effects of contestant heterogeneity on tournament incentives have been theoretically analyzed for the two-contestant-case, tournament incentives in a typical organizational context with more than two contestants and with more than one prize, have not been studied so far. In our paper, we analyze these effects theoretically as well as empirically by studying incentive travel sales contests as a quantitatively important component of compensation, and we also present first empirical evidence on (successful and unsuccessful) organizational attempts to reduce contestant heterogeneity by active handicapping and league-building.

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Publisher Info
Paper provided by University of Zurich, Institute for Strategy and Business Economics (ISU) in its series Working Papers with number 0075.

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Length: 27 pages
Date of creation: Feb 2007
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Handle: RePEc:iso:wpaper:0075

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Related research
Keywords: Further training Investing in human capital Costs-benefit ratio

Find related papers by JEL classification:
M5 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics
M12 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - Personnel Management; Executive Compensation
M53 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - Training

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  1. Uschi Backes-Gellner & Donata Bessey & Kerstin Pull & Simone Tuor, 2008. "What Behavioural Economics Teaches Personnel Economics," Working Papers 0077, University of Zurich, Institute for Strategy and Business Economics (ISU). [Downloadable!]
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