Although relative performance schemes are pervasive in organizations, reliable empirical data on induced sabotage behavior almost nonexistent. We study repeated tournaments a controlled laboratory experiment and observe that effort higher for wage spreads. Additionally, we find also the presence of tournament incentives, agents react reciprocally to wages by exerting effort. Destructive activities reduced explicitly calling them their name “sabotage.” Communication among principal can curb...

Abstract In corporate contests, employees compete for a prize. Ideally, contests induce to exert productive effort which increases their probability of winning. many environments, however, can also improve own ranking position by harming colleagues. Such negative incentive effects are largely unexplored, partly be attributed the fact that sabotaging behavior is almost unobservable in field. this study we analyze experimental with heterogeneous players who able mutually sabotage each other....

A real-effort experiment is investigated in which supervisors have to rate the performance of individual workers who turn receive a bonus payment based on these ratings. We compare baseline treatment are not restricted their rating behavior forced distribution system they assign differentiated grades. find that productivity significantly higher under by about 6% 12%. However, effects less clear cut when participants prior experience with condition. Moreover, becomes detrimental access simple...

Job rotation, i.e. a lateral transfer of an employee between jobs within company, is frequently used as means to develop employees, learn about their abilities well motivate them. We investigate the determinants and performance effects job rotation empirically by analyzing large panel data-set covering German banking financial services sector. In particular, we study (i) how prior individual affects propensity rotate (ii) changes after rotation. find that while both, low- high-performers...

The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center place communication between

We theoretically as well experimentally analyze tournaments in which one of the agents leads over other before entering tournament, that is, competitors benefits from a head start. The principal may decide upon informing about degree this asymmetry. She cannot commit to giving feedback ex ante or not and, thus, chooses strategy is optimal for her post. In equilibrium, reveals information if asymmetry too large. Our experimental findings qualitatively confirm our theoretical prediction....

Abstract In organizational theory, it is a widely accepted postulate that cooperation among subjects enforceable. This assumption essential for the evaluation of two frequently discussed incentive systems: team and tournament compensation. Whereas in team‐based pay systems highly desired, rank‐order tournaments—labeled as ‘collusion’—is regarded one main drawbacks relative performance evaluation. this experimental study, different communication technologies are introduced into both...

Abstract Rank-order tournaments are usually implemented in organizations to provide incentives for eliciting employees’ effort and/or identify the agent with higher ability, example promotion tournaments. We close a gap literature by experimentally analyzing ceteris paribus variation of prize spread - being major design feature symmetric and an asymmetric setting. find that significantly increases as predicted standard theory. However, only sufficiently large spreads weak players competing...

We experimentally analyze whether being exposed to different incentive schemes induces subjects change their behavior. In particular, we investigate the effect on trust and trustworthiness measured by conducting an investment game. implement two simple modeling basic characteristics of a cooperative environment in which payoffs are based group's performance, as well competitive result from individuals' relative performances. Our results indicate that expectation positively affected team...

From an employer's perspective a tournament should induce agents to exert productive activities but refrain from destructive ones. We experimentally test the predictive power of model which suggests that - within reasonable framework and are not influenced neither by number taking part in nor fraction winner prizes. Our results clearly confirm sabotage tournaments indeed occurs. While size has virtually no effect on behavior, balanced loser prizes seems particularly enhance activities.

Although relative performance schemes are pervasive in organizations reliable empirical data on induced sabotage behavior is almost non-existent. We study tournaments a controlled laboratory experiment and able to confirm one of the key insights from theory: effort increase with wage spread. Additionally, we find that even presence tournament incentives, agents react reciprocally higher wages, which mitigates problem. Destructive activities reduced by explicitly calling them their name...

Traditionally, experimental economics uses controlled and incentivized field lab experiments to analyze economic behavior. However, investigating peer effects in the classic settings is challenging due reflection problem: Who influencing whom? To overcome this, we enlarge methodological toolbox of these by means Virtual Reality. After introducing validating a real-effort sorting task, embed virtual agent as human subject, who independently performs an identical task. We conducted two (a)...

Tournament incentive schemes offer payments dependent on relative performance and thereby are intended to motivate agents exert productive effort. Unfortunately, however, an agent may also be tempted destroy the production of his competitors in order improve own position. In present study we investigate whether this sabotage problem is mitigated a repeated interaction between principal. As can hardly observed real-world organizations employ controlled experiment. Our data provide clear...

A real effort experiment is investigated in which supervisors have to rate the performance of individual workers who turn receive a bonus payment based on these ratings. We compare baseline treatment were not restricted their rating behavior forced distribution system they had assign differentiated grades. find that productivity was significantly higher under by about 8%. But also absence distribution, deliberate differentiation positively affected output subsequent work periods.

The application of economic theory and principles to firms’ human resource problems is commonplace today. Personnel economics has come a long way since its early days in the late 1970s 1980s, when scholars developed theoretical foundations. In this contribution introduction Special Issue ‘Advances personnel economics’ German Journal Human Resource Management, we would like illustrate origins field, outline how relates other research areas, describe major developments field address future challenges.