The Pros and Cons of Workplace Tournaments

IZA World of Labor

19 Pages Posted: 2 Nov 2016

Date Written: November 1, 2016

Abstract

Tournaments are commonly used in the workplace to determine promotion, assign bonuses, and motivate personal development. Tournament-based contracts can be very effective in eliciting high effort, often outperforming other compensation contracts, but they can also have negative consequences for both managers and workers. The benefits and disadvantages of workplace tournaments have been identified in theoretical, empirical, and experimental research over the past several decades. Based on these findings, I provide suggestions and guidelines for when it might be beneficial to use tournaments in the workplace.

Keywords: tournaments, contests, competition, contracts, workplace

JEL Classification: C7, C8, C9, J4, J7, L1, L2, M1, M5

Suggested Citation

Sheremeta, Roman M., The Pros and Cons of Workplace Tournaments (November 1, 2016). IZA World of Labor. Available at SSRN: https://ssrn.com/abstract=2862456

Roman M. Sheremeta (Contact Author)

Case Western Reserve University ( email )

10900 Euclid Ave.
Cleveland, OH 44106
United States

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