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Yes Men in Tournaments

  • Jason G. Cummins
  • Ingmar Nyman

We study a rank-order tournament in which employees acquire and use private information for an investment decision. In this environment, competition can turn employees into yes men who make investment decisions that excessively agree with preconceived notions. The specter of yes-man behavior may drive the tournament incentive intensity and the employees' information-collection effort either to zero or above the first-best efficient levels. We also show that yes-man problems are alleviated by a stronger correlation between the employees' sources of uncertainty and by the use of individual compensation contracts rather than a tournament.

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Article provided by Mohr Siebeck, Tübingen in its journal Journal of Institutional and Theoretical Economics.

Volume (Year): 169 (2013)
Issue (Month): 4 (December)
Pages: 621-659

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Handle: RePEc:mhr:jinste:urn:sici:0932-4569(201312)169:4_621:ymit_2.0.tx_2-2
DOI: 10.1628/093245613X13806312325779
Contact details of provider: Web page: https://www.mohr.de/jite

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