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Envy and Loss Aversion in Tournaments

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  • Gerald Eisenkopf
  • Sabrina Teyssier

Abstract

In tournaments, the large variance in effort provision is incompatible with standard economic theory. In our experiment we test theoretical predictions about the role of envy and loss aversion in tournaments. Our results confirm that envy implies higher effort while loss aversion increases the variance of effort. Moreover, we show that standard theory provides a good explanation for competitive behavior when envy and loss aversion do not play a role in the decision making process.

Suggested Citation

  • Gerald Eisenkopf & Sabrina Teyssier, 2010. "Envy and Loss Aversion in Tournaments," TWI Research Paper Series 52, Thurgauer Wirtschaftsinstitut, Universität Konstanz.
  • Handle: RePEc:twi:respas:0052
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Envy and Loss Aversion in Tournaments
      by Miguel in Simoleon Sense on 2010-07-16 04:05:35

    Citations

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    Cited by:

    1. Doruk Iris & Alessandro Tavoni, 2016. "Tipping Points and Loss Aversion in International Environmental Agreements," Working Papers 1603, Research Institute for Market Economy, Sogang University.
    2. 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.
    3. Simon Gaechter & Lingbo Huang & Martin Sefton, 2017. "Disappointment Aversion and Social Comparisons in a Real-Effort Competition," CESifo Working Paper Series 6489, CESifo Group Munich.
    4. Gill, David & Stone, Rebecca, 2015. "Desert and inequity aversion in teams," Journal of Public Economics, Elsevier, vol. 123(C), pages 42-54.
    5. Roman M. Sheremeta, 2013. "Overbidding And Heterogeneous Behavior In Contest Experiments," Journal of Economic Surveys, Wiley Blackwell, vol. 27(3), pages 491-514, July.
    6. Roman M. Sheremeta & William A. Masters & Timothy N. Cason, 2012. "Winner-Take-All and Proportional-Prize Contests: Theory and Experimental Results," Working Papers 12-04, Chapman University, Economic Science Institute.
    7. Roman M. Sheremeta, 2014. "Behavioral Dimensions of Contests," Working Papers 14-14, Chapman University, Economic Science Institute.
    8. Kimbrough, Erik O. & Sheremeta, Roman M. & Shields, Timothy W., 2014. "When parity promotes peace: Resolving conflict between asymmetric agents," Journal of Economic Behavior & Organization, Elsevier, vol. 99(C), pages 96-108.
    9. Sheremeta, Roman, 2014. "Behavior in Contests," MPRA Paper 57451, University Library of Munich, Germany.
    10. Subhasish M. Chowdhury & Joo Young Jeon & Abhijit Ramalingam, 2016. "Property rights and loss aversion in contests," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 16-14, School of Economics, University of East Anglia, Norwich, UK..
    11. Ludwig, Sandra & Lünser, Gabriele K., 2012. "Observing your competitor – The role of effort information in two-stage tournaments," Journal of Economic Psychology, Elsevier, vol. 33(1), pages 166-182.
    12. Sheremeta, Roman, 2016. "Impulsive Behavior in Competition: Testing Theories of Overbidding in Rent-Seeking Contests," MPRA Paper 73731, University Library of Munich, Germany.
    13. Eisenkopf, Gerald, 2016. "Communication and Conflict Management," Annual Conference 2016 (Augsburg): Demographic Change 145634, Verein für Socialpolitik / German Economic Association.
    14. Delfgaauw, Josse & Dur, Robert & Non, Arjan & Verbeke, Willem, 2014. "Dynamic incentive effects of relative performance pay: A field experiment," Labour Economics, Elsevier, vol. 28(C), pages 1-13.
    15. Gerald Eisenkopf, 2015. "Communication and conflict management," Working Paper Series of the Department of Economics, University of Konstanz 2015-21, Department of Economics, University of Konstanz.
    16. Eisenkopf, Gerald, 2014. "The impact of management incentives in intergroup contests," European Economic Review, Elsevier, vol. 67(C), pages 42-61.
    17. Gerald Eisenkopf, 2013. "The Impact of Management Incentives in Intergroup Contests," Working Paper Series of the Department of Economics, University of Konstanz 2013-26, Department of Economics, University of Konstanz.
    18. Yingchao Zhang & Oliver Fabel & Christian Thomann, 2015. "Pay inequity effects on back-office employees’ job performances: the case of a large insurance firm," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 23(2), pages 421-439, June.
    19. Gerald Eisenkopf, 2013. "The Impact of Management Incentives in Intergroup Contests," TWI Research Paper Series 87, Thurgauer Wirtschaftsinstitut, Universität Konstanz.

    More about this item

    Keywords

    Tournament; Envy; Loss Aversion;

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