Englmaier, Florian Grimm, Stefan Grothe, Dominik Schindler, David Schudy, Simeon
Year of Publication:
CESifo Working Paper No. 9189
Center for Economic Studies and ifo Institute (CESifo), Munich
Tournaments are often used to improve performance in innovation contexts. Tournaments provide monetary incentives but also render teams' identity and social-image concerns salient. We study the effects of tournaments on team performance in a non-routine task and identify the importance of these behavioral aspects. In a natural field experiment (n>1,700 participants), we vary the salience of team identity, social-image concerns, and whether teams face monetary incentives. Increased salience of team identity does not improve performance. Social-image motivates mainly the top-performing teams. Additional monetary incentives improve all teams' outcomes without crowding out teams' willingness to explore or perform similar tasks again.