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A Crowding-Out Effect for Relative Income

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

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.

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Paper provided by School of Economics and Finance, Queensland University of Technology in its series School of Economics and Finance Discussion Papers and Working Papers Series with number 236.

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Length: 7 Pages
Date of creation: 23 Oct 2008
Date of revision:
Handle: RePEc:qut:dpaper:236
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