Solidarity and Performance Differences

To investigate the influence of performance differences on donating behavior in a solidarity game we introduce a real effort task. In each three-person-group subjects are ranked according to their task performance. Since each potential winner is informed about his own rank and the potential losers? ranks, they are able to regard performance differences between various potential losers and between themselves and a potential loser. We run another treatment without a real effort task to check for the influence of performance. We find different kinds of donating behaviour which seem to be fundamental characteristics.Solidarity, Performance Differences, Real Effort, Experiment

Subjective Performance Evaluation and Inequality Aversion

Many firms use subjective performance appraisal systems due to lack of objective performance measures. In these cases, supervisors usually have to rate the performance of their subordinates. Using such systems, it is a well established fact that many supervisors tend to assess the employees too good (leniency bias) and that the appraisals hardly vary across employees of a certain supervisor (centrality bias). We explain these two biases in a model with a supervisor, who has preferences for the utility of her inequality averse subordinates, and discuss determinants of the size of the biases. Extensions of the basic model include the role of supervisor’s favoritism of one particular agent and the endogenous effort choice of agents. Whether inequality averse agents exert higher efforts then purely self-oriented ones, depends on the size of effort costs and inequality aversion.appraisals, inequality aversion, performance evaluation, centrality bias, leniency bias

Whom will you choose? - Collaborator Selection and Selector’s Self-Prediction

Our experiment investigates managers’ self-predictions of their subsequent performance and, based upon, their choice of a collaborator. Our results show that managers’ self-predictions are not biased anymore after they are informed about the performance of a reference group. In spite of this, most managers do not rationally choose a collaborator given their beliefs. In a second treatment, superiors (who are assumed to be at a higher hierarchy level than the managers) obtain various information, e.g. about managers’ self-predictions, and have to predict the managers’ performances. Our data show that superiors adapt their predictions into the direction of the managers’ self- predictions, although not completely. Particularly, superiors think that their managers’ self-predictions are biased if they are lower than the average performance of the reference group. Based upon their predictions, superiors have to select a collaborator for their managers. We find that superiors’ collaborator choices do not significantly differ from the managers’ choices. This proves due to excellent information processing by both, managers and superiors, which on the whole leads to very similar predictions of managers’ subsequent performance.Employee selection, self-prediction, overconfidence, experiment

Risk Taking in Winner-Take-All Competition

We analyze a two-stage game between two heterogeneous players. At stage one, common risk is chosen by one of the players. At stage two, both players observe the given level of risk and simultaneously invest in a winner-take-all competition. The game is solved theoretically and then tested by using laboratory experiments. We find three effects that determine risk taking at stage one - an effort effect, a likelihood effect and a reversed likelihood effect. For the likelihood effect, risk taking and investments are clearly in line with theory. Pairwise comparison shows that the effort effect seems to be more relevant than the reversed likelihood effect when taking risk

Risk Taking in Winner-Take-All Competition

We analyze a two-stage game between two heterogeneous players. At stage one, common risk is chosen by one of the players. At stage two, both players observe the given level of risk and simultaneously invest in a winner-take-all competition. The game is solved theoretically and then tested by using laboratory experiments. We find three effects that determine risk taking at stage one - an effort effect, a likelihood effect and a reversed likelihood effect. For the likelihood effect, risk taking and investments are clearly in line with theory. Pairwise comparison shows that the effort effect seems to be more relevant than the reversed likelihood effect when taking risk.Tournaments; Competition; Risk-Taking; Experiment

Risk Taking in Winner-Take-All Competition

We analyze a two-stage game between two heterogeneous players. At stage one, common risk is chosen by one of the players. At stage two, both players observe the given level of risk and simultaneously invest in a winner-take-all competition The game is solved theoretically and then tested by using laboratory experiments. We find three effects that determine risk taking at stage one - an effort effect, a likelihood effect and a reversed likelihood effect. For the likelihood effect, risk taking and investments are clearly in line with theory. Pairwise comparison shows that the effort effect seems to be more relevant than the reversed likelihood effect when takin risk.Tournaments; Competition; Risk-Taking; Experiment

Risk taking and investing in electoral competition

Abstract. We analyze a two-player electoral contest game between a challenger and an incumbent. First, the challenger decides whether to choose a high-risk campaign (e.g., risky platforms, negative campaigning, an interactive Web technology) or a less risky one. In a second stage, both the challenger and the incumbent raise funds and invest in the electoral contest. The politicians differ in their fund-raising costs. According to theory, a high-cost challenger should choose high risk (gambling for resurrection). If the benefit of winning is sufficiently large, a low-cost challenger should take high risk either to discourage the incumbent or to prevent intense campaigning. Both effects are based on the fact that high risk campaigning reduces incentives to invest in the contest. In case of a rather small benefit of winning, a low-cost challenger should prefer low risk to avoid jeopardizing his competitive advantage. Our experimental findings show that gambling for resurrection plays a role. Taking low risk to preserve a competitive advantage is strongly supported by the data. However, reactions of low-cost challengers when facing high benefits of winning are heterogeneous

A Service of zbw Leibniz-Informationszentrum Wirtschaft Leibniz Information Centre for Economics Risk Taking in Winner-Take-All Competition Risk Taking in Winner-Take-All Competition *

Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in March, 2008 Abstract We analyze a two-stage game between two heterogeneous players. At stage one, common risk is chosen by one of the players. At stage two, both players observe the given level of risk and simultaneously invest in a winner-take-all competition. The game is solved theoretically and then tested by using laboratory experiments. We find three effects that determine risk taking at stage one -an effort effect, a likelihood effect and a reversed likelihood effect. For the likelihood effect, risk taking and investments are clearly in line with theory. Pairwise comparison shows that the effort effect seems to be more relevant than the reversed likelihood effect when taking risk