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Title:Envy and Compassion in Tournaments PDF Logo
Authors:Grund, Christian
Sliwka, Dirk
Issue Date:2002
Series/Report no.:IZA Discussion paper series 647
Abstract:Many experiments indicate that most individuals are not purely motivated by material self interest, but also care about the well being of others. In this paper we examine tournaments among inequity averse agents, who dislike disadvantageous inequity (envy) and advantageous inequity (compassion). It turns out that inequity averse agents exert higher effort levels than purely self-interested agents for a given prize structure. Contrary to standard tournament theory first-best efforts can not be implemented when prizes are endogenous. Several extensions are studied like the case of spiteful agents, sabotage, asymmetric agents and an application on the choice between vertical and lateral promotions within firms.
Subjects:tournaments
promotions
inequity aversion
JEL:D63
D23
M52
M51
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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