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"Success breeds success" or "Pride goes before a fall"? Teams and Individuals in Best-of-Three Contests

  • Qiang Fu
  • Changxia Ke
  • Fangfang Tan

We study the impact of progress feedback in team-production contests, in which each team member is solely responsible for one part of the production task. Particularly, we employ a real-effort laboratory experiment to examine how team members react to the feedback in team-based (best-of-three) contests and whether it differs from that of individual-based (best-of-three) contests. Our data corroborate the theoretical prediction for teams: Neither a lead nor a lag in the first period affects a team's performance in the subsequent period. In individual contests, however, contrary to the theoretical prediction, we observe that leaders perform worse, but laggards perform better, after learning the outcome of the first period. Our findings offer new insights on team incentives in competition, and highlight the importance of incorporating contest structure into the design of feedback mechanisms in organizational management.

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File URL: http://www.tax.mpg.de/RePEc/mpi/wpaper/TAX-MPG-RPS-2013-06.pdf
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Paper provided by Max Planck Institute for Tax Law and Public Finance in its series Working Papers with number tax-mpg-rps-2013-06.

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Length: 43 pages
Date of creation: Oct 2013
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Handle: RePEc:mpi:wpaper:tax-mpg-rps-2013-06
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