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Does a Short-Term Increase in Incentives Boost Performance?

Author

Listed:
  • Angelova, Vera

    (TU Berlin)

  • Giebe, Thomas

    (Linnaeus University)

  • Ivanova-Stenzel, Radosveta

    (TU Berlin)

Abstract

If agents are exposed to continual competitive pressure, how does a short-term variation of the severity of the competition affect agents\' performance? In a real-effort laboratory experiment, we study a one-time increase in incentives in a sequence of equally incentivized contests. Our results suggest that a short-term increase in incentives induces a behavioral response but does not boost total performance.

Suggested Citation

  • Angelova, Vera & Giebe, Thomas & Ivanova-Stenzel, Radosveta, 2017. "Does a Short-Term Increase in Incentives Boost Performance?," Rationality and Competition Discussion Paper Series 60, CRC TRR 190 Rationality and Competition.
  • Handle: RePEc:rco:dpaper:60
    as

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    References listed on IDEAS

    as
    1. Andrew McGee & Peter McGee, 2019. "After The Tournament: Outcomes And Effort Provision," Economic Inquiry, Western Economic Association International, vol. 57(4), pages 2125-2146, October.
    2. Lackner, Mario & Stracke, Rudi & Sunde, Uwe & Winter-Ebmer, Rudolf, 2015. "Are Competitors Forward Looking in Strategic Interactions? Evidence from the Field," Economics Series 319, Institute for Advanced Studies.
    3. Emmanuel Dechenaux & Dan Kovenock & Roman Sheremeta, 2015. "A survey of experimental research on contests, all-pay auctions and tournaments," Experimental Economics, Springer;Economic Science Association, vol. 18(4), pages 609-669, December.
    4. David Gill & Victoria Prowse, 2012. "A Structural Analysis of Disappointment Aversion in a Real Effort Competition," American Economic Review, American Economic Association, vol. 102(1), pages 469-503, February.
    5. David Johnson & Timothy C. Salmon, 2016. "Sabotage versus Discouragement: Which Dominates Post Promotion Tournament Behavior?," Southern Economic Journal, Southern Economic Association, vol. 82(3), pages 673-696, January.
    6. Götte, Lorenz & Huffman, David B., 2006. "Incentives and the Allocation of Effort Over Time: The Joint Role of Affective and Cognitive Decision Making," IZA Discussion Papers 2400, Institute of Labor Economics (IZA).
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    contest; tournament; real-effort; experiment; contract theory; forward-looking;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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