The Essential Economics of Threshold-Based Incentives: Theory, Estimation, and Evidence from the Western States 100

40 Pages Posted: 29 Apr 2010 Last revised: 16 Aug 2019

See all articles by Darren P. Grant

Darren P. Grant

Sam Houston State University - College of Business Administration - Department of Economics and International Business

Date Written: December 1, 2014

Abstract

Many public and private entities utilize incentive systems in which improvements in measured performance are rewarded only when the agent crosses some pre-specified threshold. This paper comprehensively analyzes the effects of these incentive systems on effort, the net benefits of effort, and the accuracy of performance information that is provided to the public, and lays out methods for estimating each. These methods are then used to reveal the motivations and racing strategy of ultramarathoners trying to complete a one hundred mile race in under twenty-four hours.

Keywords: thresholds, ultramarathons

JEL Classification: D81, I21

Suggested Citation

Grant, Darren P., The Essential Economics of Threshold-Based Incentives: Theory, Estimation, and Evidence from the Western States 100 (December 1, 2014). Journal of Economic Behavior and Organization, Vol. 130, No. 1, 2016. Available at SSRN: https://ssrn.com/abstract=1597331 or http://dx.doi.org/10.2139/ssrn.1597331

Darren P. Grant (Contact Author)

Sam Houston State University - College of Business Administration - Department of Economics and International Business ( email )

SHSU Box 2118
Huntsville, TX 77341-2118
United States
936-294-4324 (Phone)

HOME PAGE: http://www.shsu.edu/dpg006

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