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A Crowding-Out Effect for Relative Income

Author

Listed:
  • Benno Torgler
  • Bruno S.Frey
  • Markus Schaffner
  • Sascha L.Schmidt

Abstract

The risk of external interventions crowding-out intrinsic motivation has long been established in economics. This paper introduces a new dimension by arguing that a crowding-out effect does become possible if individuals receive higher relative compensation. Using a unique, large data set that focuses on 26 seasons in basketball (NBA) we find empirical support for a relative crowding-out effect. Performance is reduced as a reaction to a relative income advantage.

Suggested Citation

  • Benno Torgler & Bruno S.Frey & Markus Schaffner & Sascha L.Schmidt, 2008. "A Crowding-Out Effect for Relative Income," School of Economics and Finance Discussion Papers and Working Papers Series 236, School of Economics and Finance, Queensland University of Technology.
  • Handle: RePEc:qut:dpaper:236
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    File URL: http://external-apps.qut.edu.au/business/documents/discussionPapers/2008/236Torgler.pdf
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    References listed on IDEAS

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    Cited by:

    1. C. Bram Cadsby & Jim Engle-Warnick & Tony Fang & Fei Song, 2014. "Psychological Incentives, Financial Incentives, and Risk Attitudes in Tournaments: An Artefactual Field Experiment," Working Papers 1403, University of Guelph, Department of Economics and Finance.

    More about this item

    Keywords

    Crowding-out; relative income; positional concerns; motivation;

    JEL classification:

    • D00 - Microeconomics - - General - - - General
    • D60 - Microeconomics - - Welfare Economics - - - General
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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