An Empirical Investigation of Gaming Responses to Performance

46 Pages Posted: 24 Sep 1998

See all articles by Pascal Courty

Pascal Courty

University of Victoria; European University Institute - Economics Department (ECO); Centre for Economic Policy Research (CEPR)

Gerald Marschke

University at Albany - Department of Economics; National Bureau of Economic Research; Institute for the Study of Labor (IZA); Harvard Law School, Labor & Worklife Program

Date Written: December 2, 1997

Abstract

This paper studies the provision of explicit incentives and the measurement of performance in a large service organization. The output produced by the agents of this organization is not contractible and is proxied by imperfect measures of performance. The measured outcomes are determined partly by agents' effort and partly by random factors which are observed by agents but are independent of their effort. We present evidence that agents use their private information to take credit for some outcomes that would have occurred in the absence of their intervention. Furthermore, we present evidence that these performance-driven incentive responses do not maximize the organization's objectives. This paper is one of the first attempts to demonstrate gaming in performance incentives by conducting a formal efficiency analysis.

JEL Classification: J33, L14

Suggested Citation

Courty, Pascal and Marschke, Gerald R. and Marschke, Gerald R., An Empirical Investigation of Gaming Responses to Performance (December 2, 1997). Available at SSRN: https://ssrn.com/abstract=131328 or http://dx.doi.org/10.2139/ssrn.131328

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