Tournament fever and the perception of strategic uncertainty in performance contests

Arbeitspapier

As firms implement tournament bonus reward schemes, mainly the idea is to introduce competition amongst their agents in the order to promote their performance. Tournaments in which agents compete for a bonus by investing effort, are frequently applied, e.g., in development races, political contests, and promotion tournaments. The fallibility of evaluation processes and the inherent variability of competitors' effort choices introduce uncertainty to tournament settings with respect to the outcome. If heterogeneous agents interact in such a setting, experimental results suggest that increasing uncertainty leads to more excess of effort if compared to optimality (Avrahami et al., 2007). This paper experimentally investigates whether the observed overperformance in the tournament is similar to overbidding in auctions. Furthermore, it disentangles two possible sources of over-performance: either biased responses to, or wrong beliefs of, opponents' effort choices. We show that over-performance can be explained by tournament fever: agents overreact to own beliefs, if compared to best responses, and mainly overestimate their opponents. Leveling uncertainty influences both overshooting and the precision of beliefs.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Jena Economic Research Papers ; No. 2008,057

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Compensation Packages; Payment Methods ; Auditing ; Personnel Economics: Compensation and Compensation Methods and Their Effects ; Personnel Economics: Labor Contracting Devices
• Thema: Uncertainty ; incentive effects ; tournament fever ; auction fever ; all-pay auction ; Leistungsorientierte Vergütung ; Risiko ; Leistungsanreiz ; Stress ; Auktionstheorie ; Test

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Uske, Tobias
• Ereignis: Veröffentlichung
• (wer): Friedrich Schiller University Jena and Max Planck Institute of Economics
• (wo): Jena
• (wann): 2008

Weitere Informationen

• Handle: http://hdl.handle.net/10419/25737
• Letzte Aktualisierung: 10.03.2025, 11:42 MEZ