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Emotions and the Optimality of Unfair Tournaments

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  • Kräkel, Matthias

Abstract

We introduce a concept of emotions that emerge when workers compare their own performance with the performances of co-workers. Assuming heterogeneity among the workers the interplay of emotions and incentives is analyzed within the framework of rank-order tournaments which are frequently used in practice. Tournaments seem to be an appropriate starting point for this concept because the main idea of a tournament is inducing incentives by making workers compare themselves with their opponents. We differentiate between exogenous and endogenous tournament prizes and identify certain conditions under which the employer benefits from emotional workers. In this case, he clearly prefers unfair to fair tournaments. Furthermore, the concept of emotions is used to explain the puzzling findings on the oversupply of effort in experimental tournaments.

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Paper provided by Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich in its series Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems with number 45.

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Date of creation: May 2005
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Handle: RePEc:trf:wpaper:45

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Keywords: anger; emotions; pride; tournaments;

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Cited by:
  1. Sjögren Lindquist, Gabriella, 2006. "Tournaments and Unfair Treatment," Working Paper Series 8/2006, Swedish Institute for Social Research.

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