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  Tournaments and piece rates revisited: a theoretical and experimental study of output-dependent prize tournaments

Güth, W., Levínský, R., Pull, K., & Weisel, O. (2016). Tournaments and piece rates revisited: a theoretical and experimental study of output-dependent prize tournaments. Review of Economic Design, 20(1), 69-88.

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 Creators:
Güth, Werner1, Author              
Levínský, René, Author
Pull, Kerstin, Author
Weisel, Ori, Author
Affiliations:
1Max Planck Institute for Research on Collective Goods, Max Planck Society, ou_2173688              

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Free keywords: Tournaments, Relative performance, Experiment, Principal-agent
 JEL: J3 - Wages, Compensation, and Labor Costs
 JEL: L2 - Firm Objectives, Organization, and Behavior
 Abstract: Tournaments represent an increasingly important component of organizational compensation systems. While prior research focused on fixed-prize tournaments where the prize to be awarded is set in advance, we introduce ‘output-dependent prizes’ where the tournament prize is endogenously determined by agents’ output—it is high when the output is high and low when the output is low. We show that tournaments with output-dependent prizes outperform fixed-prize tournaments and piece rates. A multi-agent experiment supports the theoretical result.

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 Dates: 2016
 Publication Status: Published in print
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 Table of Contents: -
 Rev. Type: Peer
 Identifiers: -
 Degree: -

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Title: Review of Economic Design
Source Genre: Journal
 Creator(s):
Affiliations:
Publ. Info: -
Pages: - Volume / Issue: 20 (1) Sequence Number: - Start / End Page: 69 - 88 Identifier: -