Adding Tournament to Tournament: Combining Between-Team and Within-Team Incentives

Majerczyk, Michael and Sheremeta, Roman and Tian, Yu (2018): Adding Tournament to Tournament: Combining Between-Team and Within-Team Incentives.

Abstract

We examine theoretically and experimentally how combining between-team and within-team incentives affects behavior in team tournaments. Theory predicts that free-riding is likely to occur when there are only between-team incentives, and offering within-team incentives may solve this problem. However, if individuals collude, then within-team incentives may not be as effective at reducing free-riding. Consistent with the theoretical predictions, the results of our experiment indicate that although between-team incentives are effective at increasing individual effort, there is substantial free-riding and declining effort over time. Importantly, a combination of between-team and within-team incentives is effective not only at generating effort but also at sustaining effort over time, mitigating free-riding problem, increasing cooperation and decreasing collusion within teams.

• Item Type: MPRA Paper
• Language: English
• Keywords: individual incentive, team incentive, tournament, free-riding, collusion
• Subjects: C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C72 - Noncooperative Games; D - Microeconomics > D7 - Analysis of Collective Decision-Making > D72 - Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior; H - Public Economics > H4 - Publicly Provided Goods > H41 - Public Goods

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