Promotions and Incentives: The Case of Multistage Elimination Tournaments

Steffen Altmann, Armin Falk, Matthias Wibral

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    Abstract

    Promotions play an important role for the provision of incentives in firms. We analyze incentives in multistage elimination tourna- ments with controlled laboratory experiments. In our two main treatments, we compare a two-stage tournament to a one-stage tournament. Subjects in the two-stage treatment provide excess effort in the first stage, both with respect to Nash predictions and compared to the strategically equivalent one-stage tournament. Additional control treatments confirm that excess effort in early stages is a robust finding and suggest that above-equilibrium effort might be driven by limited degrees of forward-looking behavior and subjects deriving nonmonetary value from competing.
    Original languageEnglish
    Pages (from-to)149-174
    Number of pages26
    JournalJournal of Labor Economics
    Volume30
    Issue number1
    DOIs
    Publication statusPublished - Jan 2012

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