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Yes Men in Tournaments

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  • Jason G. Cummins
  • Ingmar Nyman

Abstract

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.

Suggested Citation

  • Jason G. Cummins & Ingmar Nyman, 2013. "Yes Men in Tournaments," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 169(4), pages 621-659, December.
    • Handle: RePEc:mhr:jinste:urn:sici:0932-4569(201312)169:4_621:ymit_2.0.tx_2-2
    DOI: 10.1628/093245613X13806312325779
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    Cited by:

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    2. Ivan Soraperra & Joël van der Weele & Marie Claire Villeval & Shaul Shalvi, 2022. "The Social Construction of Ignorance: Experimental Evidence," Post-Print hal-03907198, HAL.
    3. Abhinav Sacheti & Ian Gregory-Smith & David Paton, 2016. "Managerial Decision Making Under Uncertainty," Journal of Sports Economics, , vol. 17(1), pages 44-63, January.
    4. Shaul Shalvi & Ivan Soraperra & Joël van der Weele & Marie Claire Villeval, 2019. "Shooting the Messenger? Supply and Demand in Markets for Willful Ignorance," Tinbergen Institute Discussion Papers 19-071/I, Tinbergen Institute.
    5. Hagmann, David & Feiler, Daniel, 2020. "The Agent-Selection Dilemma in Distributive Bargaining," OSF Preprints y6tq2, Center for Open Science.

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    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions

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