An Empirical Investigation of Gaming Responses to Explicit Performance Incentives

Courty, Pascal; Marschke, Gerald

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An Empirical Investigation of Gaming Responses to Explicit Performance Incentives

34 Pages Posted: 12 Feb 2002

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: January 2002

Abstract

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.

Keywords: Performance incentives, contract theory, moral hazard, multi tasking, government incentives

JEL Classification: J33, L14

Suggested Citation: Suggested Citation

Courty, Pascal and Marschke, Gerald R. and Marschke, Gerald R., An Empirical Investigation of Gaming Responses to Explicit Performance Incentives (January 2002). Available at SSRN: https://ssrn.com/abstract=300443