Promotion and demotion contests

43 Pages Posted: 28 Mar 2022

See all articles by Jonathan Levy

Jonathan Levy

The University of Sydney

Jingjing Zhang

Royal Melbourne Institute of Technology (RMIT) University

Multiple version iconThere are 2 versions of this paper

Date Written: February 23, 2022

Abstract

To increase total effort, we design a two-stage lottery contest where heterogeneous agents face the prospect of promotion and the threat of demotion from one stage to the next. We develop two competing theoretical models to generate predictions about behaviour: (i) the standard economic model and (ii) a behavioural model where agents derive non-monetary utility from winning. The experimental results provide strong support for the use of promotion and demotion in contests when ability differences are small, however, they do not provide strong support for the use of promotion and demotion in contests when ability differences are large. Our experimental results are consistent with the predictions made by the behavioural model.

Keywords: Promotion, demotion, heterogeneity, contest design, experiments

JEL Classification: C72, C92, D72, J33, M51

Suggested Citation

Levy, Jonathan and Zhang, Jingjing, Promotion and demotion contests (February 23, 2022). Available at SSRN: https://ssrn.com/abstract=4037771 or http://dx.doi.org/10.2139/ssrn.4037771

Jonathan Levy

The University of Sydney ( email )

P.O. Box H58
Australia Square
Sydney, NSW 2006
Australia

Jingjing Zhang (Contact Author)

Royal Melbourne Institute of Technology (RMIT) University ( email )

Australia

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
63
Abstract Views
399
Rank
548,106
PlumX Metrics