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Promotions and Incentives: The Case of Multistage Elimination Tournaments

  • Steffen Altmann
  • Armin Falk
  • Matthias Wibral

Promotions play an important role for the provision of incentives in firms. We analyze incentives in multistage elimination tournaments with controlled laboratory experiments. In our two main treatments, we compare a two-stage tournament to a one-stage tournament. Subjects in the two-stage treatment provide excess effort in the first stage, both with respect to Nash predictions and compared to the strategically equivalent one-stage tournament. Additional control treatments confirm that excess effort in early stages is a robust finding and suggest that above-equilibrium effort might be driven by limited degrees of forward-looking behavior and subjects deriving nonmonetary value from competing.

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File URL: http://www.jstor.org/stable/pdfplus/10.1086/662130
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File URL: http://www.jstor.org/stable/full/10.1086/662130
Download Restriction: Access to the online full text or PDF requires a subscription.

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Article provided by University of Chicago Press in its journal Journal of Labor Economics.

Volume (Year): 30 (2012)
Issue (Month): 1 ()
Pages: 149 - 174

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Handle: RePEc:ucp:jlabec:doi:10.1086/662130
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  1. Dohmen Thomas & Falk Armin, 2010. "Performance Pay and Multi-dimensional Sorting - Productivity, Preferences and Gender," Research Memorandum 012, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
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  13. Ronald G. Ehrenberg & Michael L. Bognanno, 1988. "Do Tournaments Have Incentive Effects?," NBER Working Papers 2638, National Bureau of Economic Research, Inc.
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