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By the well established tournament literature, incomplete information regarding the employees' productivity is essential for the rationalization of (efficiency-enhancing) tournaments. In this paper we propose an alternative rationalization of tournaments focusing on a fully informed principal...
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robustness to labor market competition both theoretically and experimentally. Consistent with our theoretical model, we observe … substantial ratchet effects in the absence of competition, which is nearly eliminated when competition is introduced; this is true …
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Perverse incentives are ubiquitous in different economic settings. In sports, they often take the form of temptation to deliberately lose matches (the phenomenon known as tanking or sandbagging). In practice, there were even such pathological situations as when a soccer team intentionally scored...
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We analyze the impact of social comparison on optimal contract design under imperfect labor market competition for … if the degree of competition for talent is sufficiently low. In contrast, a ranking unambiguously reduces welfare if the … competition intensity is high and agents suffer from lagging behind while it can enhance welfare (depending on the fraction of …
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