|
EconStor >
Max-Planck-Institut für Ökonomik, Jena >
Jena Economic Research Papers, MPI für Ökonomik >
Please use this identifier to cite or link to this item:
http://hdl.handle.net/10419/36666
|
| | |
| Title: | | Tournaments and piece rates revisited: A theoretical and experimental study of premium incentives  |
| Authors: | | Güth, Werner Levínský, René Pull, Kerstin Weisel, Ori |
| Issue Date: | | 2010 |
| Series/Report no.: | | Jena economic research papers 2010,039 |
| Abstract: | | Tournaments represent an increasingly important component of organizational compensation systems. While prior research focused on fixed-prize tournaments, i.e., on tournaments where the prize or prize sum to be awarded is set in advance, we introduce a new type of tournament into the literature: premium incentives. While premium incentives, just like fixed-prize tournaments, are based on relative performance, the prize to be awarded is not set in advance but is a function of the firm's success: the prize is high if the firm is successful and low if it is not successful. Relying on a simple model of cost minimization, we are able to show that premium incentives outperform fixed-prize tournaments as well as piece rates. Our theoretical result is qualitatively confirmed by a controlled laboratory experiment and has important practical implications for the design of organizational incentive systems. |
| Subjects: | | Tournaments Incentives Economic experiments |
| JEL: | | C72 C91 J33 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Jena Economic Research Papers, MPI für Ökonomik
|
| |
| | |
Download bibliographical data as:
BibTeX
|
| |
Share on:http://hdl.handle.net/10419/36666
|
Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.
|