In teamwork settings, providing effective leadership can be challenging for team leaders due to multitasking and the difficulty in measuring and rewarding leadership input. These challenges might lead to underprovision of leadership activities, which can ultimately impede the productivity of the...

The Peter Principle captures two stylized facts about hierarchies: first, promotions often place employees into jobs for which they are less well suited than for that previously held. Second, demotions are extremely rare. Why do organizations not correct 'wrong' promotion decision? This paper...

Several empirical studies have challenged tournament theory by pointing out that (1) there is considerable pay variation within hierarchy levels, (2) promotion premiums only in part explain hierarchical wage differences and (3) external recruitment is observable on nearly any hierarchy level. We...

The promotion tournament as a potentially important incentive mechanism for top management in transition economies has not been examined by the emerging literature on managerial incentives in transition economies. This paper is the first attempt to fill this important gap in the literature. The...

We analyse how physicians respond to contractual changes and incentives within a multitasking environment. In 1999 the Quebec government (Canada) introduced an optional mixed compensation system, combining a fixed per diem with a discounted (relative to the traditional fee-for-service system)...

We provide an explanation for peer pressure in teams based on inequity aversion. Analyzing a two-period model with two agents, we find that the effect of inequity aversion strongly depends on the information structure. When contributions are unobservable, agents act as if they were purely...

Promotion tournaments play an important role for the provision of incentives in firms. In this paper, we extend research on single-stage rank-order tournaments and analyze behavior in multi-stage elimination tournaments. The main treatment of our laboratory experiment is a two-stage tournament...

This paper examines how professional female tennisplayers react to: i) prize incentives and ii) heterogeneity in ex ante players' abilities. It is found that a larger prize spread encourages women to increase effort, even when controlling for many tournament and player characteristics. Further...