Relative Performance Pay in the Shadow of Crisis

Arbeitspapier

We analyze whether incentives from relative performance pay are reduced or enhanced if a department is possibly terminated due to a crisis. Our benchmark model shows that incentives decrease in a severe crisis, but are boosted given a minor crisis since efforts are strategic complements in the former case but strategic substitutes in the latter one. We tested our predictions in a laboratory experiment. The results confirm the effort ranking but show that in a severe crisis individuals deviate from equilibrium significantly stronger than in other situations. This behavior contradicts the benchmark model and leads to a five times higher survival probability of the department. We develop a new theoretical approach that may explain players' behavior.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: SFB/TR 15 Discussion Paper ; No. 425

Klassifikation und Themen

• Klassifikation: Wirtschaft
• Thema: crisis ; incentives ; strategic complements ; strategic substitutes ; tournament

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Kräkel, Matthias ; Nieken, Petra
• Ereignis: Veröffentlichung
• (wer): Sonderforschungsbereich/Transregio 15 - Governance and the Efficiency of Economic Systems (GESY)
• (wo): München
• (wann): 2013

Weitere Informationen

• DOI: doi:10.5282/ubm/epub.17290
• Handle: http://hdl.handle.net/10419/93860
• URN: urn:nbn:de:bvb:19-epub-17290-5
• Letzte Aktualisierung: 10.03.2025, 11:43 MEZ