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Monetary and Social Incentives in Multi-Tasking: The Ranking Substitution Effect

Author

Listed:
  • Stefan, Matthias

    (University of Innsbruck)

  • Huber, Jürgen
  • Kirchler, Michael

    (University of Innsbruck)

  • Sutter, Matthias

    (Max Planck Institute for Research on Collective Goods)

  • Walzl, Markus

    (University of Innsbruck)

Abstract

Rankings are prevalent information and incentive tools in labor markets with strong competition for talent. In a dynamic model of multi-tasking and an accompanying experiment with financial professionals, we identify hidden ranking costs when performance in one task is incentivized and ranked while another prosocial task is not: (i) a ranking influences behavior if individuals lag behind: they spend more total effort and substitute effort in the prosocial task with effort in the ranked task; (ii) those ahead in the ranking spend less total effort and lower relative effort in the ranked task. Implications for incentive schemes are discussed.

Suggested Citation

  • Stefan, Matthias & Huber, Jürgen & Kirchler, Michael & Sutter, Matthias & Walzl, Markus, 2020. "Monetary and Social Incentives in Multi-Tasking: The Ranking Substitution Effect," IZA Discussion Papers 13345, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp13345
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    More about this item

    Keywords

    multi-tasking decision problem; rank incentives; framed field experiment; finance professionals;
    All these keywords.

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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