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Workaholics and Drop Outs in Optimal Organizations

Author

Listed:
  • Wieland Muller

    () (Department of Economics, New York University)

  • Andrew Schotter

    () (Department of Politics, New York University)

Abstract

This paper reports the results of experiments designed to test the theory of the optimal composition of prizes in contests. We find that while in the aggregate the behavior of our subjects is consistent with that predicted by the theory, such aggregate results mask an unexpected compositional effect on the individual level. While theory predicts that subject efforts are continuous and increasing functions of ability, the actual efforts of our laboratory subjects bifurcate. Low ability workers drop out and exert little or no effort while high ability subjects try too hard. This discontinuity, which is masked by aggregation, has significant consequences for behavior in organizations.

Suggested Citation

  • Wieland Muller & Andrew Schotter, 2007. "Workaholics and Drop Outs in Optimal Organizations," Working Papers 0022, New York University, Center for Experimental Social Science.
  • Handle: RePEc:cso:wpaper:0022
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    File URL: http://cess.nyu.edu/0022:2007-01.pdf
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    Cited by:

    1. Ghazala Azmat & Nagore Iriberri, 2010. "The Provision of Relative Performance Feedback Information: An Experimental Analysis of Performance and Happiness," Working Papers 454, Barcelona Graduate School of Economics.
    2. Kirchkamp, Oliver, 2004. "Why are stabilisations delayed : an experiment with an application to all pay auctions," Papers 04-06, Sonderforschungsbreich 504.
    3. Harbring, Christine & Irlenbusch, Bernd, 2004. "Incentives in Tournaments with Endogenous Prize Selection," IZA Discussion Papers 1340, Institute for the Study of Labor (IZA).
    4. Christine Harbring & Gabriele K. Lünser, 2008. "On the Competition of Asymmetric Agents," German Economic Review, Verein für Socialpolitik, vol. 9, pages 373-395, August.
    5. Azmat, Ghazala & Iriberri, Nagore, 2010. "The importance of relative performance feedback information: Evidence from a natural experiment using high school students," Journal of Public Economics, Elsevier, vol. 94(7-8), pages 435-452, August.
    6. Richard B. Freeman & Alexander M. Gelber, 2010. "Prize Structure and Information in Tournaments: Experimental Evidence," American Economic Journal: Applied Economics, American Economic Association, vol. 2(1), pages 149-164, January.
    7. Noussair, C.N. & Silver, J., 2006. "Behavior in all-pay auctions under incomplete information," Other publications TiSEM 9833c8a8-7aa4-4529-a617-8, Tilburg University, School of Economics and Management.
    8. Christine Harbring & Bernd Irlenbusch & Matthias Kräkel & Reinhard Selten, 2004. "Sabotage in Asymmetric Contests – An Experimental Analysis," Bonn Econ Discussion Papers bgse12_2004, University of Bonn, Germany.
    9. PARREIRAS, Sérgio O. & RUBINCHIK-PESSACH, Anna, 2006. "Contests with heterogeneous agents," CORE Discussion Papers 2006004, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    10. Harbring, Christine & Irlenbusch, Bernd, 2005. "How Many Winners Are Good to Have? On Tournaments with Sabotage," IZA Discussion Papers 1777, Institute for the Study of Labor (IZA).
    11. Christine Harbring & Bernd Irlenbusch & Matthias Krakel & Reinhard Selten, 2007. "Sabotage in Corporate Contests - An Experimental Analysis," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 14(3), pages 367-392.
    12. Fonseca, Miguel A., 2009. "An experimental investigation of asymmetric contests," International Journal of Industrial Organization, Elsevier, vol. 27(5), pages 582-591, September.
    13. Harbring, Christine & Irlenbusch, Bernd, 2008. "How many winners are good to have?: On tournaments with sabotage," Journal of Economic Behavior & Organization, Elsevier, vol. 65(3-4), pages 682-702, March.
    14. Noussair, Charles & Silver, Jonathon, 2006. "Behavior in all-pay auctions with incomplete information," Games and Economic Behavior, Elsevier, vol. 55(1), pages 189-206, April.

    More about this item

    Keywords

    Contests; All-Pay Auctions; Experiments;

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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