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Positive self-image in tournaments

Author

Listed:
  • Luis Santos Pinto

Abstract

This paper analyzes the implications of worker overestimation of productivity for firms in which incentives take the form of tournaments. Each worker overestimates his productivity but is aware of the bias in his opponent s self-assessment. The manager of the firm, on the other hand, correctly assesses workers productivities and self-beliefs when setting tournament prizes. The paper shows that, under a variety of circumstances, firms make higher profits when workers have positive self-image than if workers do not. By contrast, workers welfare declines due to their own misguided choices.

Suggested Citation

  • Luis Santos Pinto, 2007. "Positive self-image in tournaments," Nova SBE Working Paper Series wp510, Universidade Nova de Lisboa, Nova School of Business and Economics.
    • Handle: RePEc:unl:unlfep:wp510
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    Cited by:

    1. Sandra Ludwig & Julia Nafziger, 2011. "Beliefs about overconfidence," Theory and Decision, Springer, vol. 70(4), pages 475-500, April.
    2. Valeria Maggian & Antonio Nicolò, 2016. "The wrong man for the job: biased beliefs and job mismatching," Post-Print halshs-01324733, HAL.
    3. Ludwig, Sandra & Wichardt, Philipp C. & Wickhorst, Hanke, 2011. "Overconfidence can improve an agent's relative and absolute performance in contests," Economics Letters, Elsevier, vol. 110(3), pages 193-196, March.
    4. Pierre Fleckinger & David Martimort & Nicolas Roux, 2024. "Should They Compete or Should They Cooperate? The View of Agency Theory," Journal of Economic Literature, American Economic Association, vol. 62(4), pages 1589-1646, December.
    5. Bastani, Spencer & Giebe, Thomas & Guertler, Oliver, 2024. "Overconfidence and gender gaps in career outcomes: insights from a promotion signaling model," Working Paper Series 2024:21, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    6. de la Rosa, Leonidas Enrique, 2011. "Overconfidence and moral hazard," Games and Economic Behavior, Elsevier, vol. 73(2), pages 429-451.
    7. Dohmen, Thomas, 2014. "Behavioral labor economics: Advances and future directions," Labour Economics, Elsevier, vol. 30(C), pages 71-85.
    8. Spencer Bastani & Thomas Giebe & Oliver Gürtler, 2023. "Overconfidence and Gender Equality in the Labor Market," ECONtribute Discussion Papers Series 220, University of Bonn and University of Cologne, Germany.
    9. Vanessa Mertins & Wolfgang Hoffeld, 2015. "Do Overconfident Workers Cooperate Less? The Relationship Between Overconfidence and Cooperation in Team Production," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 36(4), pages 265-274, June.
    10. Hendrik Hakenes & Svetlana Katolnik, 2018. "Optimal Team Size and Overconfidence," Group Decision and Negotiation, Springer, vol. 27(4), pages 665-687, August.
    11. Adrian Bruhin & Fidel Petros & Luís Santos-Pinto, 2024. "The role of self-confidence in teamwork: experimental evidence," Experimental Economics, Springer;Economic Science Association, vol. 27(3), pages 687-712, July.
    12. Chen, Si & Schildberg-Hörisch, Hannah, 2019. "Looking at the bright side: The motivational value of confidence," European Economic Review, Elsevier, vol. 120(C).
    13. Santos-Pinto, Luís & Sekeris, Petros G., 2025. "How confidence heterogeneity shapes effort and performance in tournaments and contests," Journal of Mathematical Economics, Elsevier, vol. 116(C).
    14. Legge, Stefan & Schmid, Lukas, 2013. "Rankings, Random Successes, and Individual Performance," Economics Working Paper Series 1340, University of St. Gallen, School of Economics and Political Science.
    15. Simon Dato & Andreas Grunewald & Daniel Müller, 2018. "Expectation-based loss aversion and rank-order tournaments," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 66(4), pages 901-928, December.

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    Keywords

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    JEL classification:

    • A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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