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Sabotage in Tournaments: Evidence from a Laboratory Experiment

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Listed author(s):
  • Harbring, Christine

    ()

    (RWTH Aachen University)

  • Irlenbusch, Bernd

    ()

    (University of Cologne)

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    Abstract

    Although relative performance schemes are pervasive in organizations reliable empirical data on induced sabotage behavior is almost non-existent. We study sabotage in tournaments in a controlled laboratory experiment and are able to confirm one of the key insights from theory: effort and sabotage increase with the wage spread. Additionally, we find that even in the presence of tournament incentives, agents react reciprocally to higher wages, which mitigates the sabotage problem. Destructive activities are reduced by explicitly calling them by their name 'sabotage'. Communication among principal and agents curbs sabotage due to agreements on flat prize structures and increased output.

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    Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4205.

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    Length: 31 pages
    Date of creation: Jun 2009
    Handle: RePEc:iza:izadps:dp4205
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    Keywords: relative performance scheme; tournament; reciprocity; sabotage; experiment;

    Find related papers by JEL classification:

    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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