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First-place loving and last-place loathing: How rank in the distribution of performance affects effort provision

Author

Listed:
  • David Gill
  • Victoria Prowse
  • Zdenka Kissova
  • Jaesun Lee

Abstract

Rank-order relative-performance evaluation, in which pay, promotion and symbolic awards depend on the rank of workers in the distribution of performance, is ubiquitous. Whenever firms use rank-order relative-performance evaluation, workers receive feedback about their rank. Using a real-effort experiment, we aim to discover whether workers respond to the specific rank that they achieve. In particular, we leverage random variation in the allocation of rank among subjects who exerted the same effort to obtain a causal estimate of the rank response function that describes how effort provision responds to the content of rank-order feedback. We find that the rank response function is U-shaped. Subjects exhibit 'first-place loving' and 'last-place loathing', that is subjects work hardest after being ranked first or last. We discuss implications of our findings for the optimal design of firms' performance feedback policies, workplace organizational structures and incentives schemes.

Suggested Citation

  • David Gill & Victoria Prowse & Zdenka Kissova & Jaesun Lee, 2016. "First-place loving and last-place loathing: How rank in the distribution of performance affects effort provision," Economics Series Working Papers 783, University of Oxford, Department of Economics.
  • Handle: RePEc:oxf:wpaper:783
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    File URL: http://www.economics.ox.ac.uk/materials/papers/14422/paper-783.pdf
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    References listed on IDEAS

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    Cited by:

    1. repec:bla:ecinqu:v:56:y:2018:i:3:p:1512-1525 is not listed on IDEAS
    2. Ghazala Azmat & Manuel Bagues & Antonio Cabrales & Nagore Iriberri, 2016. "What You Don’t Know... Can’t Hurt You? A Field Experiment on Relative Performance Feedback in Higher Education," Working Papers 788, Queen Mary University of London, School of Economics and Finance.
    3. Simon Gächter & Lingbo Huang & Martin Sefton, 2018. "Disappointment Aversion And Social Comparisons In A Real‐Effort Competition," Economic Inquiry, Western Economic Association International, vol. 56(3), pages 1512-1525, July.
    4. Fischer, Mira & Wagner, Valentin, 2018. "Effects of timing and reference frame of feedback: Evidence from a field experiment," Discussion Papers, Research Unit: Market Behavior SP II 2018-206, WZB Berlin Social Science Center.
    5. repec:eee:jeborg:v:158:y:2019:i:c:p:62-89 is not listed on IDEAS
    6. Benjamin Elsner & Ingo E. Isphording & Ulf Zölitz, 2018. "Achievement rank affects performance and major choices in college," ECON - Working Papers 300, Department of Economics - University of Zurich.
    7. Ghazala Azmat & Manuel Bagues & Antonio Cabrales & Nagore Iriberri, 2018. "What you don't know...Can't hurt you?: A natural field experiment on relative performance feedback in higher education," Sciences Po publications info:hdl:2441/5fhe3c1k6b8, Sciences Po.
    8. Michael Kirchler & Florian Lindner & Utz Weitzel, 2018. "Delegated decision making and social competition in the finance industry," Working Papers 2018-07, Faculty of Economics and Statistics, University of Innsbruck, revised Sep 2018.
    9. Vanessa, Mertins & Jeworrek, Sabrina & Vlassopoulos, Michael, 2018. ""The Good News about Bad News": Feedback about Past Organisational Failure Bad ist Impact in Worker Productivity," Annual Conference 2018 (Freiburg, Breisgau): Digital Economy 181644, Verein für Socialpolitik / German Economic Association.
    10. repec:eee:joepsy:v:62:y:2017:i:c:p:155-172 is not listed on IDEAS
    11. Mbiti, Isaac M. & Serra, Danila, 2018. "Health Workers' Behavior, Patient Reporting and Reputational Concerns: Lab-in-the-Field Experimental Evidence from Kenya," IZA Discussion Papers 11352, Institute of Labor Economics (IZA).
    12. Kiessling, Lukas & Radbruch, Jonas & Schaube, Sebastian, 2018. "The Impact of Self-Selection on Performance," IZA Discussion Papers 11365, Institute of Labor Economics (IZA).
    13. Ertac, Seda & Koçkesen, Levent & Ozdemir, Duygu, 2016. "The role of verifiability and privacy in the strategic provision of performance feedback: Theory and experimental evidence," Games and Economic Behavior, Elsevier, vol. 100(C), pages 24-45.
    14. repec:eee:jeborg:v:162:y:2019:i:c:p:1-23 is not listed on IDEAS
    15. Legge, Stefan & Schmid, Lukas, 2016. "Media attention and betting markets," European Economic Review, Elsevier, vol. 87(C), pages 304-333.
    16. Bhanot, Syon P., 2017. "Rank and response: A field experiment on peer information and water use behavior," Journal of Economic Psychology, Elsevier, vol. 62(C), pages 155-172.
    17. Brade, Raphael & Himmler, Oliver & Jäckle, Robert, 2018. "Normatively Framed Relative Performance Feedback – Field Experiment and Replication," MPRA Paper 88830, University Library of Munich, Germany.
    18. Simon Haenni, 2016. "Do Setbacks Delay the Participation in Repeated Competitions? Evidence from a Natural Experiment with Amateur Tennis Players," Cahiers de Recherches Economiques du Département d'économie 16.13, Université de Lausanne, Faculté des HEC, Département d’économie.
    19. Philip Brookins & Jennifer Brown & Dmitry Ryvkin, 2016. "Peer Information and Risk-taking under Competitive and Non-competitive Pay Schemes," NBER Working Papers 22486, National Bureau of Economic Research, Inc.
    20. Shinya Kajitani & Keiichi Morimoto & Shiba Suzuki, 2018. "Information Feedback in Relative Grading: Evidence from a Field Experiment," Discussion Papers 40, Meisei University, School of Economics, revised 09 Sep 2019.
    21. Ertac, Seda & Gümren, Mert & Koçkesen, Levent, 2019. "Strategic feedback in teams: Theory and experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 162(C), pages 1-23.
    22. repec:eee:jeborg:v:142:y:2017:i:c:p:11-23 is not listed on IDEAS
    23. Ghazala Azmat & Manuel Bagues & Antonio Cabrales & Nagore Iriberri, 2016. "What You Don’t Know... Can’t Hurt You? A Field Experiment on Relative Performance," Working Papers 788, Queen Mary University of London, School of Economics and Finance.
    24. Jeworrek, Sabrina & Mertins, Vanessa & Vlassopoulos, Michael, 2018. ""The good news about bad news": Feedback about past organisational failure and its impact on worker productivity," IWH Discussion Papers 1/2018, Halle Institute for Economic Research (IWH).

    More about this item

    Keywords

    Relative performance evaluation; Relative performance feedback; Rank order feedback; Dynamic effort provision; Real effort experiment; Flat wage; Fixed wage; Taste for rank; Status seeking; Social esteem; Self esteem; Public feedback; Private feedback.;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation

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