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A General Test of Gaming


  • Gerald Marschke
  • Pascal Courty


An important lesson from the incentive literature is that explicit incentives may elicit dysfunctional and unintended responses, also known as gaming responses. The existence of these responses, however, is difficult to demonstrate in practice because this behavior is typically hidden from the researcher. We present a simple model showing that one can identify gaming by estimating the correlation between a performance measure and the true goal of the organization before and after the measure has been activated. Our hypothesis is that gaming takes place if this correlation decreases with activation. Using data from a public sector organization, we find evidence consistent with our hypothesis. We draw implications for the selection of performance measures.

Suggested Citation

  • Gerald Marschke & Pascal Courty, 2004. "A General Test of Gaming," Discussion Papers 04-04, University at Albany, SUNY, Department of Economics.
  • Handle: RePEc:nya:albaec:04-04

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    References listed on IDEAS

    1. repec:bla:joares:v:36:y:1998:i::p:1-35 is not listed on IDEAS
    2. Paul Oyer, 1998. "Fiscal Year Ends and Nonlinear Incentive Contracts: The Effect on Business Seasonality," The Quarterly Journal of Economics, Oxford University Press, vol. 113(1), pages 149-185.
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    4. Cragg, Michael, 1997. "Performance Incentives in the Public Sector: Evidence from the Job Training Partnership Act," Journal of Law, Economics, and Organization, Oxford University Press, vol. 13(1), pages 147-168, April.
    5. James J. Heckman & Jeffrey Smith & Nancy Clements, 1997. "Making The Most Out Of Programme Evaluations and Social Experiments: Accounting For Heterogeneity in Programme Impacts," Review of Economic Studies, Oxford University Press, vol. 64(4), pages 487-535.
    6. Pascal Courty & Gerald Marschke, 2004. "An Empirical Investigation of Gaming Responses to Explicit Performance Incentives," Journal of Labor Economics, University of Chicago Press, vol. 22(1), pages 23-56, January.
    7. George Baker, 2002. "Distortion and Risk in Optimal Incentive Contracts," Journal of Human Resources, University of Wisconsin Press, vol. 37(4), pages 728-751.
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    12. Gerald Marschke, 2000. "Performance Incentives and Bureaucratic Behavior: Evidence from a Federal Bureaucracy," Discussion Papers 00-09, University at Albany, SUNY, Department of Economics.
    13. Pascal Courty & Gerald Marschke, 2003. "Dynamics of Performance-Measurement Systems," Oxford Review of Economic Policy, Oxford University Press, vol. 19(2), pages 268-284, Summer.
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    More about this item


    Performance Incentive; Performance Measurement; Gaming; Multitasking; Government Organization.;

    JEL classification:

    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation


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