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Adding tournament to tournament: Combining between-team and within-team incentives

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  • Majerczyk, Michael
  • Sheremeta, Roman
  • Tian, Yu

Abstract

We examine theoretically and experimentally how combining between-team and within-team incentives affects behavior in team tournaments. Theory predicts that free-riding will occur when there are only between-team incentives, and offering within-team incentives may solve this problem. However, if individuals collude, then within-team incentives may not be as effective at reducing free-riding. Consistent with the theoretical predictions, the results of our experiment indicate that although between-team incentives are effective at increasing individual effort, there is substantial free-riding and declining effort over time. Importantly, a combination of between-team and within-team incentives is effective not only at generating effort but also at sustaining effort over time, mitigating free-riding problem, increasing cooperation and decreasing collusion within teams.

Suggested Citation

  • Majerczyk, Michael & Sheremeta, Roman & Tian, Yu, 2019. "Adding tournament to tournament: Combining between-team and within-team incentives," Journal of Economic Behavior & Organization, Elsevier, vol. 166(C), pages 1-11.
  • Handle: RePEc:eee:jeborg:v:166:y:2019:i:c:p:1-11
    DOI: 10.1016/j.jebo.2019.09.002
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    More about this item

    Keywords

    Individual incentive; Team incentive; Tournament; Free-riding; Collusion;

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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