Arbeitspapier
Setting Incentives: Temporary Performance Premiums Versus Promotion Tournaments
Two alternative relative compensation schemes are compared with respect to total output that can be generated at a given sum of salaries. While the promotion regime guarantees that any salary increase is permanent, the premium system allows a reduction in the income of an agent to the base salary after one period. It is shown that the optimum promotion tournament system induces a higher total output than the optimum premium system. This result occurs because a promotion regime allows distortion in a contest in favor of winners of previous contests.
- Language
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Englisch
- Bibliographic citation
-
Series: CESifo Working Paper ; No. 432
- Classification
-
Wirtschaft
- Subject
-
Tournament
relative compensation
internal labor markets
- Event
-
Geistige Schöpfung
- (who)
-
Meier, Volker
- Event
-
Veröffentlichung
- (who)
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Center for Economic Studies and ifo Institute (CESifo)
- (where)
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Munich
- (when)
-
2001
- Handle
- Last update
-
10.03.2025, 11:45 AM CET
Data provider
This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Meier, Volker
- Center for Economic Studies and ifo Institute (CESifo)
Time of origin
- 2001
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