Incentives in Economic Departments: Testing Tournaments?

Existing tests of tournament theory have recently been criticized <p> for their failure to distinguish tournaments from other theories that <p> have similar effects like standards and marginal productivity theory <p> (Gibbs, 1994, 1996; Prendergast, 1999). In this paper, we propose a <p> series of empirical tests that allow to make this distinction. We use <p> a dataset of average wages by rank in US economic departments over <p> the period 1977-1997 and link this information to individual production <p> data to test whether wage gaps affect the productivity and cooperative <p> behavior of economists and to control for marginal productivity theory. <p> We find that the wage gap is increasing along the hierarchy, even when <p> controlling for production by rank. Moreover, wages are more sensitive <p> to productivity for higher ranks. We find some evidence that higher <p> wage gaps lead to higher productivity but not that wage gaps depend <p> on the number of contestants nor that they lead to less cooperation.