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Competitive incentives: working harder or working smarter?

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  • Anat Bracha
  • Chaim Fershtman

Abstract

Almost all jobs require a combination of cognitive effort and labor effort. This paper focuses on the effect that competitive incentive schemes have on the chosen combination of these two types of efforts. We use an experimental approach to show that competitive incentives may induce agents to work harder but not necessarily smarter. This effect was stronger for women.

Suggested Citation

  • Anat Bracha & Chaim Fershtman, 2012. "Competitive incentives: working harder or working smarter?," Working Papers 12-12, Federal Reserve Bank of Boston.
  • Handle: RePEc:fip:fedbwp:12-12
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    References listed on IDEAS

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    1. Lazear, Edward P & Rosen, Sherwin, 1981. "Rank-Order Tournaments as Optimum Labor Contracts," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 841-864, October.
    2. Uri Gneezy & Kenneth L. Leonard & John A. List, 2009. "Gender Differences in Competition: Evidence From a Matrilineal and a Patriarchal Society," Econometrica, Econometric Society, vol. 77(5), pages 1637-1664, September.
    3. Booth, Alison & Nolen, Patrick, 2012. "Choosing to compete: How different are girls and boys?," Journal of Economic Behavior & Organization, Elsevier, vol. 81(2), pages 542-555.
    4. Uri Gneezy & Stephan Meier & Pedro Rey-Biel, 2011. "When and Why Incentives (Don't) Work to Modify Behavior," Journal of Economic Perspectives, American Economic Association, vol. 25(4), pages 191-210, Fall.
    5. Martin G. Kocher & Marc V. Lenz & Matthias Sutter, 2010. "Psychological pressure in competitive environments: Evidence from a randomized natural experiment: Comment," NCER Working Paper Series 55, National Centre for Econometric Research.
    6. Dreber, Anna & Johannesson, Magnus, 2008. "Gender differences in deception," Economics Letters, Elsevier, vol. 99(1), pages 197-199, April.
    7. Muriel Niederle & Lise Vesterlund, 2007. "Do Women Shy Away From Competition? Do Men Compete Too Much?," The Quarterly Journal of Economics, Oxford University Press, vol. 122(3), pages 1067-1101.
    8. Lazear, Edward P, 2000. "The Future of Personnel Economics," Economic Journal, Royal Economic Society, vol. 110(467), pages 611-639, November.
    9. Eckel, Catherine C. & Grossman, Philip J., 2008. "Men, Women and Risk Aversion: Experimental Evidence," Handbook of Experimental Economics Results, Elsevier.
    10. Anna Dreber & Emma Essen & Eva Ranehill, 2011. "Outrunning the gender gap—boys and girls compete equally," Experimental Economics, Springer;Economic Science Association, vol. 14(4), pages 567-582, November.
    11. Ehrenberg, Ronald G & Bognanno, Michael L, 1990. "Do Tournaments Have Incentive Effects?," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1307-1324, December.
    12. Catherine C. Eckel & Philip J. Grossman, 2008. "Forecasting Risk Attitudes: An Experimental Study Using Actual and Forecast Gamble Choices," Monash Economics Working Papers archive-01, Monash University, Department of Economics.
    13. Rachel Croson & Uri Gneezy, 2009. "Gender Differences in Preferences," Journal of Economic Literature, American Economic Association, vol. 47(2), pages 448-474, June.
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    Citations

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    Cited by:

    1. Bradler, Christiane & Neckermann, Susanne & Warnke, Arne Jonas, 2016. "Incentivizing creativity: A large-scale experiment with tournaments and gifts," ZEW Discussion Papers 16-040, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    2. Jared Rubin & Anya Samek & Roman M. Sheremeta, 2017. "Loss Aversion and the Quantity-Quality Tradeoff," Working Papers 17-20, Chapman University, Economic Science Institute.
    3. Tim Straub & Henner Gimpel & Florian Teschner & Christof Weinhardt, 2015. "How (not) to Incent Crowd Workers," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 57(3), pages 167-179, June.
    4. Essl, Andrea & Jaussi, Stefanie, 2017. "Choking under time pressure: The influence of deadline-dependent bonus and malus incentive schemes on performance," Journal of Economic Behavior & Organization, Elsevier, vol. 133(C), pages 127-137.
    5. Bruno S. Frey & Jana Gallus, 2014. "Awards are a Special Kind of Signal," CREMA Working Paper Series 2014-04, Center for Research in Economics, Management and the Arts (CREMA).

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    Keywords

    Competition;

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