@inproceedings{Schottner2010Technology,
abstract = {We identify a new problem that may arise when heterogeneous workers are motivated by relative performance schemes: If workers' abilities and the production technology are complements, the firm may prefer not to adopt a more advanced technology even though this technology would costlessly increase each worker's productivity. Due to the complementarity between ability and technology, under technology adoption the productivity of a more able worker increases more strongly than the productivity of a less able colleague, thereby reducing the motivation of both workers to exert effort under a relative incentive scheme. We show that this adverse incentive effect is dominant and, consequently, keeps the firm from introducing a better production technology if talent uncertainty is sufficiently high and/or monitoring of workers is sufficiently precise.},
address = {Frankfurt a. M.},
author = {Anja Sch\"{o}ttner and Matthias Kr\"{a}kel},
copyright = {http://www.econstor.eu/dspace/Nutzungsbedingungen},
keywords = {M55; J33; D82; 330; complementarities; heterogeneous workers; production technology; tournament},
language = {eng},
number = {G15-V3},
publisher = {Verein f\"{u}r Socialpolitik},
series = {Beitr\"{a}ge zur Jahrestagung des Vereins f\"{u}r Socialpolitik 2010: \"{O}konomie der Familie - Session: Principal Agent Problems},
title = {Technology Choice and Incentives under Relative Performance Schemes},
url = {http://hdl.handle.net/10419/37191},
year = {2010}
}
