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Sabotage in Tournaments: Evidence from a Laboratory Experiment

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Author Info
Harbring, Christine () (University of Cologne)
Irlenbusch, Bernd () (London School of Economics)
Abstract

Although relative performance schemes are pervasive in organizations reliable empirical data on induced sabotage behavior is almost non-existent. We study sabotage in tournaments in a controlled laboratory experiment and are able to confirm one of the key insights from theory: effort and sabotage increase with the wage spread. Additionally, we find that even in the presence of tournament incentives, agents react reciprocally to higher wages, which mitigates the sabotage problem. Destructive activities are reduced by explicitly calling them by their name 'sabotage'. Communication among principal and agents curbs sabotage due to agreements on flat prize structures and increased output.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4205.

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Length: 31 pages
Date of creation: Jun 2009
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Handle: RePEc:iza:izadps:dp4205

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Related research
Keywords: sabotage; tournament; reciprocity; relative performance scheme; experiment;

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Find related papers by JEL classification:
M52 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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  1. Ernst Fehr & Simon Gaechter, . "Fairness and Retaliation: The Economics of Reciprocitys," IEW - Working Papers iewwp040, Institute for Empirical Research in Economics - IEW. [Downloadable!]
    Other versions:
  2. Bull, Clive & Schotter, Andrew & Weigelt, Keith, 1987. "Tournaments and Piece Rates: An Experimental Study," Journal of Political Economy, University of Chicago Press, vol. 95(1), pages 1-33, February. [Downloadable!] (restricted)
    Other versions:
  3. Gary Charness, 2004. "Attribution and Reciprocity in an Experimental Labor Market," Journal of Labor Economics, University of Chicago Press, vol. 22(3), pages 665-688, July. [Downloadable!]
    Other versions:
  4. Harbring, Christine & Irlenbusch, Bernd, 2003. "An experimental study on tournament design," Labour Economics, Elsevier, vol. 10(4), pages 443-464, August. [Downloadable!] (restricted)
  5. Christine Harbring & Bernd Irlenbusch & Matthias Kräkel & Reinhard Selten, 2007. "Sabotage in Corporate Contests - An Experimental Analysis," International Journal of the Economics of Business, Taylor and Francis Journals, vol. 14(3), pages 367-392. [Downloadable!] (restricted)
  6. Falk, Armin & Fehr, Ernst, 2003. "Why labour market experiments?," Labour Economics, Elsevier, vol. 10(4), pages 399-406, August. [Downloadable!] (restricted)
  7. Abbink, Klaus & Abdolkarim Sadrieh, 1995. "RatImage - research Assistance Toolbox for Computer-Aided Human Behavior Experiments," Discussion Paper Serie B 325, University of Bonn, Germany.
  8. Gary Charness & Peter Kuhn, 2007. "Does Pay Inequality Affect Worker Effort? Experimental Evidence," Journal of Labor Economics, University of Chicago Press, vol. 25, pages 693-723. [Downloadable!]
  9. Jordi Brandts & Gary Charness, 2004. "Do Labour Market Conditions Affect Gift Exchange? Some Experimental Evidence," Economic Journal, Royal Economic Society, vol. 114(497), pages 684-708, 07. [Downloadable!] (restricted)
  10. Ernst Fehr & Simon Gachter & Georg Kirchsteiger, 1997. "Reciprocity as a Contract Enforcement Device: Experimental Evidence," Econometrica, Econometric Society, vol. 65(4), pages 833-860, July.
  11. Christian Grund & Dirk Sliwka, 2005. "Envy and Compassion in Tournaments," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 14(1), pages 187-207, 03. [Downloadable!] (restricted)
    Other versions:
  12. Fehr, Ernst & Kirchsteiger, George & Riedl, Arno, 1993. "Does Fairness Prevent Market Clearing? An Experimental Investigation," The Quarterly Journal of Economics, MIT Press, vol. 108(2), pages 437-59, May. [Downloadable!] (restricted)
  13. Drago, Robert & Garvey, Gerald T, 1998. "Incentives for Helping on the Job: Theory and Evidence," Journal of Labor Economics, University of Chicago Press, vol. 16(1), pages 1-25, January. [Downloadable!] (restricted)
  14. Christine Harbring & Bernd Irlenbusch, 2005. "Incentives in Tournaments with Endogenous Prize Selection," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 161(4), pages 636-, December.
  15. Fehr, Ernst, et al, 1998. "When Social Norms Overpower Competition: Gift Exchange in Experimental Labor Markets," Journal of Labor Economics, University of Chicago Press, vol. 16(2), pages 324-51, April. [Downloadable!] (restricted)
  16. Lazear, Edward P, 1989. "Pay Equality and Industrial Politics," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 561-80, June. [Downloadable!] (restricted)
  17. Klaus Abbink & Heike Hennig-Schmidt, 2006. "Neutral versus loaded instructions in a bribery experiment," Experimental Economics, Springer, vol. 9(2), pages 103-121, June. [Downloadable!] (restricted)
  18. Christine Harbring, 2006. "The effect of communication in incentive systems-an experimental study," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 27(5), pages 333-353. [Downloadable!]
  19. Harbring, Christine & Irlenbusch, Bernd, 2008. "How many winners are good to have?: On tournaments with sabotage," Journal of Economic Behavior & Organization, Elsevier, vol. 65(3-4), pages 682-702, March. [Downloadable!] (restricted)
  20. Schotter, Andrew & Weigelt, Keith, 1992. "Asymmetric Tournaments, Equal Opportunity Laws, and Affirmative Action: Some Experimental Results," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 511-39, May. [Downloadable!] (restricted)
    Other versions:
  21. Irlenbusch, Bernd & Sliwka, Dirk, 2005. "Transparency and reciprocal behavior in employment relations," Journal of Economic Behavior & Organization, Elsevier, vol. 56(3), pages 383-403, March. [Downloadable!] (restricted)
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  22. Crawford, Vincent, 1998. "A Survey of Experiments on Communication via Cheap Talk," Journal of Economic Theory, Elsevier, vol. 78(2), pages 286-298, February. [Downloadable!] (restricted)
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