Tournaments for the Endogenous Allocating of Prizes within Workteams - Theory and Experimental Evidence

37 Pages Posted: 18 Mar 2004

See all articles by Matthias Sutter

Matthias Sutter

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods; University of Cologne - Department of Economics

Abstract

We present a model where compensation within a workteam is determined endogenously by the use of a rank-order tournament. Team members compete in their efforts for the right to propose the distribution of a prize within the team. The implementation of a proposal requires the approval of other team members. Failure to reach an agreement is costly and the role of proposer rotates in the order of members' efforts. We show in an experiment that tournaments elicit higher efforts than random determination of the proposer role. Proposers get a significantly larger share of the prize than non-proposers.

Keywords: Tournament, work incentives, teams, allocation of prizes, experiment

JEL Classification: C72, C91, C92, J33

Suggested Citation

Sutter, Matthias, Tournaments for the Endogenous Allocating of Prizes within Workteams - Theory and Experimental Evidence. Available at SSRN: https://ssrn.com/abstract=517802 or http://dx.doi.org/10.2139/ssrn.517802

Matthias Sutter (Contact Author)

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods ( email )

Kurt-Schumacher-Str. 10
D-53113 Bonn, 53113
Germany

University of Cologne - Department of Economics

Cologne, 50923
Germany

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