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Competition in the workplace: An experimental investigation

  • Benndorf, Volker
  • Rau, Holger A.

We analyze competition between workers in a gift-exchange experiment where two workers are hired by the same employer. In the competition treatment the two employees simultaneously choose their effort whereas in the baseline treatment competition cannot occur since there is only one employee per employer. We find that in the competition treatment employers implicitly set tournament incentives by rewarding employees who choose higher effort levels than their co-workers. Here, employees' effort levels increase significantly faster, which can be explained by imitation learning. Furthermore we find that employers decrease their wage payments per unit of effort exerted over time when employing two workers.

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Paper provided by Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE) in its series DICE Discussion Papers with number 53.

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Date of creation: 2012
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Handle: RePEc:zbw:dicedp:53
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  1. Kong-Pin Chen, 2003. "Sabotage in Promotion Tournaments," Journal of Law, Economics and Organization, Oxford University Press, vol. 19(1), pages 119-140, April.
  2. Johannes Abeler & Stefen Altmann & Sebastian Kube & Matthias Wibral, 2009. "Gift Exchange and Workers' Fairness Concerns - When Equality Is Unfair," Discussion Papers 2009-11, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  3. Björn Bartling & Ernst Fehr & Klaus M. Schmidt, 2010. "Screening, competition, and job design: economic origins of good jobs," IEW - Working Papers 470, Institute for Empirical Research in Economics - University of Zurich.
  4. Fehr, Ernst, et al, 1998. "When Social Norms Overpower Competition: Gift Exchange in Experimental Labor Markets," Journal of Labor Economics, University of Chicago Press, vol. 16(2), pages 324-51, April.
  5. Armin Falk & Michael Kosfeld, . "The Hidden Costs of Control," IEW - Working Papers 250, Institute for Empirical Research in Economics - University of Zurich.
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  7. Ernst Fehr & Armin Falk, 1999. "Wage Rigidity in a Competitive Incomplete Contract Market," Journal of Political Economy, University of Chicago Press, vol. 107(1), pages 106-134, February.
  8. Fernando Vega-Redondo, 1997. "The Evolution of Walrasian Behavior," Econometrica, Econometric Society, vol. 65(2), pages 375-384, March.
  9. Cabrales, Antonio & Charness, Gary, 2011. "Optimal contracts with team production and hidden information: An experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 77(2), pages 163-176, February.
  10. Charness, Gary & Kuhn, Peter, 2011. "Lab Labor: What Can Labor Economists Learn from the Lab?," Handbook of Labor Economics, Elsevier.
  11. Offerman, T.J.S. & Potters, J.J.M. & Sonnemans, J., 2002. "Imitation and belief learning in an oligopoly experiment," Other publications TiSEM a6a771c5-31ba-4193-8f76-a, Tilburg University, School of Economics and Management.
  12. Anthony M. Marino & J�n Z�bojn�k, 2004. "Internal Competition for Corporate Resources and Incentives in Teams," RAND Journal of Economics, The RAND Corporation, vol. 35(4), pages 710-727, Winter.
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  14. Simon Gaechter & Daniele Nosenzo & Martin Sefton, 2010. "The Impact of Social Camparisons of Reciprocity," Discussion Papers 2010-10, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  15. Muriel Niederle & Lise Vesterlund, 2005. "Do Women Shy Away from Competition? Do Men Compete too Much?," Discussion Papers 04-030, Stanford Institute for Economic Policy Research.
  16. Pereira, Paulo T. & Silva, Nuno & Silva, Joao Andrade e, 2006. "Positive and negative reciprocity in the labor market," Journal of Economic Behavior & Organization, Elsevier, vol. 59(3), pages 406-422, March.
  17. Huck, Steffen & Normann, Hans-Theo & Oechssler, Jorg, 1999. "Learning in Cournot Oligopoly--An Experiment," Economic Journal, Royal Economic Society, vol. 109(454), pages C80-95, March.
  18. Fehr, Ernst & Kirchsteiger, Georg & Riedl, Arno, 1998. "Gift exchange and reciprocity in competitive experimental markets," European Economic Review, Elsevier, vol. 42(1), pages 1-34, January.
  19. Georg Kirchsteiger & Ernst Fehr & Arno Riedl, 1993. "Does Fairness Prevent Market Clearing? An Experimental Investigation," ULB Institutional Repository 2013/5927, ULB -- Universite Libre de Bruxelles.
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  22. Heinz, Matthias & Juranek, Steffen & Rau, Holger A., 2011. "Do women behave more reciprocally than men? Gender differences in real effort dictator games," DICE Discussion Papers 24, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  23. Owens, Mark F. & Kagel, John H., 2010. "Minimum wage restrictions and employee effort in incomplete labor markets: An experimental investigation," Journal of Economic Behavior & Organization, Elsevier, vol. 73(3), pages 317-326, March.
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  26. repec:ner:tilbur:urn:nbn:nl:ui:12-91663 is not listed on IDEAS
  27. Sandra Maximiano & Randolph Sloof & Joep Sonnemans, 2007. "Gift Exchange in a Multi-Worker Firm," Economic Journal, Royal Economic Society, vol. 117(522), pages 1025-1050, 07.
  28. Greiner, Ben, 2004. "An Online Recruitment System for Economic Experiments," MPRA Paper 13513, University Library of Munich, Germany.
  29. Brandts, Jordi & Gërxhani, Klarita & Schram, Arthur & Ygosse-Battisti, Jolanda, 2010. "Size doesn't matter! Gift exchange in experimental labor markets," Journal of Economic Behavior & Organization, Elsevier, vol. 76(3), pages 544-548, December.
  30. Tor Eriksson & Marie-Claire Villeval, 2012. "Respect and relational contracts," Post-Print halshs-00642527, HAL.
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