IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp5755.html
   My bibliography  Save this paper

Incentives vs. Selection in Promotion Tournaments: Can a Designer Kill Two Birds with One Stone?

Author

Listed:
  • Höchtl, Wolfgang

    () (University of Innsbruck)

  • Kerschbamer, Rudolf

    () (University of Innsbruck)

  • Stracke, Rudi

    () (University of Munich)

  • Sunde, Uwe

    () (University of Munich)

Abstract

This paper studies the performance of promotion tournaments with heterogeneous participants in two dimensions: incentive provision and selection. Our theoretical analysis reveals a trade-off for the tournament designer between the two goals: While total effort is maximized if less heterogeneous participants compete against each other early in the tournament, letting more heterogeneous participants compete early increases the accuracy in selection. Experimental evidence supports our theoretical findings, indicating that the optimal design of promotion tournaments crucially depends on the objectives of the tournament designer. These findings have important implications for the optimal design of promotion tournaments in organizations.

Suggested Citation

  • Höchtl, Wolfgang & Kerschbamer, Rudolf & Stracke, Rudi & Sunde, Uwe, 2011. "Incentives vs. Selection in Promotion Tournaments: Can a Designer Kill Two Birds with One Stone?," IZA Discussion Papers 5755, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp5755
    as

    Download full text from publisher

    File URL: http://ftp.iza.org/dp5755.pdf
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Marc Gürtler & Oliver Gürtler, 2015. "The Optimality of Heterogeneous Tournaments," Journal of Labor Economics, University of Chicago Press, vol. 33(4), pages 1007-1042.
    2. Zeynep B. Irfanoglu & Shakun D. Mago & Roman M. Sheremeta, 2014. "The New Hampshire Effect: Behavior in Sequential and Simultaneous Election Contests," Working Papers 14-15, Chapman University, Economic Science Institute.
    3. Irfanoglu, Zeynep & Mago, Shakun & Sheremeta, Roman, 2015. "New Hampshire Effect: Behavior in Sequential and Simultaneous Election Contests," MPRA Paper 67520, University Library of Munich, Germany.
    4. Emmanuel Dechenaux & Dan Kovenock & Roman Sheremeta, 2015. "A survey of experimental research on contests, all-pay auctions and tournaments," Experimental Economics, Springer;Economic Science Association, vol. 18(4), pages 609-669, December.
    5. Cary Deck & Roman M. Sheremeta, 2015. "Tug-of-War in the Laboratory," Working Papers 15-14, Chapman University, Economic Science Institute.
    6. Delfgaauw, Josse & Dur, Robert & Non, Arjan & Verbeke, Willem, 2014. "Dynamic incentive effects of relative performance pay: A field experiment," Labour Economics, Elsevier, vol. 28(C), pages 1-13.
    7. Tanja H�rtnagl & Rudolf Kerschbamer & Rudi Stracke & Uwe Sunde, 2013. "Heterogeneity in Rent-Seeking Contests with Multiple Stages: Theory and Experimental Evidence," Working Papers 2013-29, Faculty of Economics and Statistics, University of Innsbruck.
    8. Stracke, Rudi, 2013. "Contest design and heterogeneity," Economics Letters, Elsevier, vol. 121(1), pages 4-7.
    9. repec:spr:etbull:v:2:y:2014:i:1:d:10.1007_s40505-014-0030-z is not listed on IDEAS
    10. Dutcher, E. Glenn & Balafoutas, Loukas & Lindner, Florian & Ryvkin, Dmitry & Sutter, Matthias, 2015. "Strive to be first or avoid being last: An experiment on relative performance incentives," Games and Economic Behavior, Elsevier, vol. 94(C), pages 39-56.
    11. Stracke, Rudi, 2012. "Orchestrating Contests with Heterogeneous Participants," Economics Working Paper Series 1218, University of St. Gallen, School of Economics and Political Science.

    More about this item

    Keywords

    promotion tournaments; heterogeneity; incentive provision; selection;

    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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp5755. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak). General contact details of provider: http://www.iza.org .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.