Envy and Compassion in Tournaments

By Christian Karl Grund, Dirk Sliwka. Social Science Research Network, 2005

227 citations recorded by the source corpus.

Many experiments indicate that most individuals are not purely motivated by material self interest, but also care about the well being of others. In this paper we examine tournaments among inequity averse agents, who dislike disadvantageous inequity (envy) and advantageous inequity (compassion). It turns out that inequity averse agents exert higher effort levels than purely self-interested agents for a given prize structure. Contrary to standard tournament theory first-best efforts can not be implemented when prizes are endogenous. Several extensions are studied like the case of spiteful agents, sabotage, asymmetric agents and an application on the choice between vertical and lateral promotions within firms.

Subfields: Economics and Econometrics, General Decision Sciences, Safety Research

View Paper: https://www.semanticscholar.org/paper/3c9ee6b37453207136dd458b08ea1abee4356b64

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Citations in the corpus

The Intensity of Incentives in Firms and Markets: Moral Hazard With Envious Agents (2010, unknown): “In a seminal paper, Holmström and Milgrom (1991) propose multi-tasking as an explanation for the different incentive intensities in firms and markets.”
Gender Differences and Dynamics in Competition: The Role of Luck (2012, unknown): “…reduce effort in the next period to reduce their probability of winning and so redistribute wealth in expectation to other members of the subject pool (see Grund and Sliwka, 2005, and Gill and Stone, 2010, for analyses of how, respectively, inequity and desert concerns affect competitive behavior).”
Performance Pay and Multi-Dimensional Sorting: Productivity, Preferences and Gender (2006, unknown): “, on the composition and interaction of selfish and reciprocal agents (see, e.g., Fehr, Klein and Schmidt, 2005; Englmaier and Wambach, 2005; Grund and Sliwka, 2005).”
SIMULTANEOUS DECISION‐MAKING IN COMPETITIVE AND COOPERATIVE ENVIRONMENTS (2013, unknown): “In the contest literature, Grund and Sliwka (2005)”
Sabotage in contests: a survey (2015, background): “Gürtler and Münster (2010) showed that contestants may want to sabotage weak contestants in the early rounds of dynamic contests to eliminate them from the competition.”
Mean–field moral hazard for optimal energy demand response management (2019, methodology): “…among which we can find Bartling and von Siemens (2010), Demougin, Fluet, and Helm (2006), Demski & Sappington (1984), Green and Stokey (1983), Grund and Sliwka (2005), Harris, Kriebel, and Raviv (1982), Holmström (1982), Itoh (2004), Mookherjee (1984), Nalebuff and Stiglitz (1983), Rey-Biel…”
Tournaments and Office Politics: Evidence from a Real Effort Experiment (2010, background): “The causes and consequences of sabotage, for example, are much better understood in principle (Lazear 1989, Chen 2003, Grund and Sliwka 2005) than in practice.”