An Empirical Investigation of Gaming Responses to Explicit Performance Incentives
University of Victoria; European University Institute - Economics Department (ECO); Centre for Economic Policy Research (CEPR)
University at Albany - Department of Economics; National Bureau of Economic Research; Institute for the Study of Labor (IZA); Harvard Law School, Labor & Worklife Program
CEPR Discussion Paper No. 3164
This Paper studies a particular kind of gaming response to explicit incentives in a large government organization. The gaming responses we consider occur when agents strategically report their performance outcomes to maximize their awards. An important contribution of this work is to examine whether this behaviour diverts resources (eg agents' time) from productive activities or whether it simply reflects an accounting phenomenon. We evaluate the efficiency impact of the behaviour we identify and find that it has a negative impact on the true goal of the organization.
Number of Pages in PDF File: 34
Keywords: Performance incentives, contract theory, moral hazard, multi tasking, government incentives
JEL Classification: J33, L14
Date posted: February 12, 2002
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