Do Tournaments Have Incentive Effects?

Much attention has been devoted to studying models of tournaments or situations in which an individual\u27s payment depends only on his or her output or rank relative to that of other competitors. Academic interest derives from the fact that under certain sets of assumptions, tournaments have desirable normative properties because of the incentive structures they provide. Our paper uses nonexperimental data to test whether tournaments actually elicit effort responses. We focus on professional golf tournaments because information on the incentive structure (prize distribution) and measures of individual output (players\u27 scores) are both available. We find strong support for the proposition that the level and structure of prizes in PGA tournaments influence players\u27 performance

Do Tournaments Have Incentive Effects?

Much attention has been devoted to studying models of tournaments or situations in which an individual's payment depends only on his output or rank, relative to other competitors. Such models are of more than academic Interest as they may well describe the compensation structures applicable to many corporate executives and professors, to sales people whose bonuses depend on their relative outputs. and to the more obvious example of professional sports tournaments. Academic interest derives from the fact that under certain sets of assumptions tournaments have desirable normative properties because of the incentive structures they provide. Our paper uses nonexperimental data to test if tournaments actually elicit desired effort responses. We focus on golf tournaments because information on the incentive structure (prize distribution) and measures of individual output (players' scores) are both available. Under suitable assumptions, players' scores can be related to players' effort and implications for both players' overall tournament scores and their scores on the last round of a tournament drawn. In addition, data are available to control for factors other than the incentive structure that should affect output; these factors include player quality, quality of the rest of the field, difficulty of the course, and weather conditions. The data used in our analyses cane from the "1985 Golf Digest Almanac", the "Official 1985 PGA Tour Media Guide", and the "1984 PGA Tour Player Record". We find strong support for the proposition that the level and structure of prizes in PGA tournaments influence players' performance.

Things Can Only get Worse? An Empirical Examination of the Peter Principle.

The results reported in this paper suggest the possible operation of the Peter Principle in a large hierarchical financial sector firm. This result holds even after we allow for variation in optimal effort over stages in the hierarchy. The method also allows us to attribute the contributory factors for the observed fall in performance after a promotion. It appears that approximately 2/3 of the fall is due to the Peter Principle and 1/3 due to lessening incentives.We acknowledge helpful comments received from Hans Hvide, and session participants at the 2005 Scottish Economic Society Conference where and earlier version of this paper was presented

The Incentive Effects of Tournaments Revisited: Evidence From the European PGA Tour

This analysis of data from the 1987 European Men\u27s Professional Golf Association (PGA) Tour strongly supports the hypothesis that the level and structure of prizes in PGA tournaments influence players\u27 performance. Specifically, players\u27 performance appears to vary positively with both the total money prizes awarded in a tournament and the marginal return to effort in the final round of play (a value that varies among players largely depending on how the prize money is allocated among finishers of different ranks). The authors suggest that these results, together with the similar results of their earlier study of the 1984 U.S. Men\u27s PGA Tour, may have implications for the design of compensation systems for certain groups of workers, such as corporate executives, college professors, and salespeople

Validity of a pictorial perceived exertion scale for effort estimation and effort production during stepping exercise in adolescent children

This is the author's PDF version of an article published in European Physical Education Review ©2002. The definitive version is available at http://epe.sagepub.com.Recent developments in the study of paediatric effort perception have continued to emphasise the importance of child-specific rating scales. The purpose of this study was to examine the validity of an illustrated 1 – 10 perceived exertion scale; the Pictorial Children’s Effort Rating Table (PCERT). 4 class groups comprising 104 children; 27 boys and 29 girls, aged 12.1±0.3 years and 26 boys, 22 girls, aged 15.3±0.2 years were selected from two schools and participated in the initial development of the PCERT. Subsequently, 48 of these children, 12 boys and 12 girls from each age group were randomly selected to participate in the PCERT validation study. Exercise trials were divided into 2 phases and took place 7 to 10 days apart. During phase 1, children completed 5 x 3-minute incremental stepping exercise bouts interspersed with 2-minute recovery periods. Heart rate (HR) and ratings of exertion were recorded during the final 15 s of each exercise bout. In phase 2 the children were asked to regulate their exercising effort during 4 x 4-minute bouts of stepping so that it matched randomly prescribed PCERT levels (3, 5, 7 and 9). Analysis of data from Phase 1 yielded significant (P<0.01) relationships between perceived and objective (HR) effort measures for girls. In addition, the main effects of exercise intensity on perceived exertion and HR were significant (P<0.01); perceived exertion increased as exercise intensity increased and this was reflected in simultaneous significant rises in HR. During phase 2, HR and estimated power output (POapprox) produced at each of the four prescribed effort levels were significantly different (P<0.01). The children in this study were able to discriminate between 4 different exercise intensities and regulate their exercise intensity according to 4 prescribed levels of perceived exertion. In seeking to contribute towards children’s recommended physical activity levels and helping them understand how to self-regulate their activity, the application of the PCERT within the context of physical education is a desirable direction for future research

Unrelated Helpers in a Primitively Eusocial Wasp: Is Helping Tailored Towards Direct Fitness?

The paper wasp Polistes dominulus is unique among the social insects in that nearly one-third of co-foundresses are completely unrelated to the dominant individual whose offspring they help to rear and yet reproductive skew is high. These unrelated subordinates stand to gain direct fitness through nest inheritance, raising the question of whether their behaviour is adaptively tailored towards maximizing inheritance prospects. Unusually, in this species, a wealth of theory and empirical data allows us to predict how unrelated subordinates should behave. Based on these predictions, here we compare helping in subordinates that are unrelated or related to the dominant wasp across an extensive range of field-based behavioural contexts. We find no differences in foraging effort, defense behaviour, aggression or inheritance rank between unrelated helpers and their related counterparts. Our study provides no evidence, across a number of behavioural scenarios, that the behaviour of unrelated subordinates is adaptively modified to promote direct fitness interests

Screening, Competition, and Job Design

In recent decades, many firms offered more discretion to their employees, often increasing the productivity of effort but also leaving more opportunities for shirking. These “high-performance work systems” are difficult to understand in terms of standard moral hazard models. We show experimentally that complementarities between high effort discretion, rent-sharing, screening opportunities, and competition are important driving forces behind these new forms of work organization. We document in particular the endogenous emergence of two fundamentally distinct types of employment strategies. Employers either implement a control strategy, which consists of low effort discretion and little or no rent-sharing, or they implement a trust strategy, which stipulates high effort discretion and substantial rent-sharing. If employers cannot screen employees, the control strategy prevails, while the possibility of screening renders the trust strategy profitable. The introduction of competition substantially fosters the trust strategy, reduces market segmentation, and leads to large welfare gains for both employers and employees

Pay Inequality, Pay Secrecy, and Effort: Theory and Evidence

We study worker and firm behavior in an efficiency-wage environment where co-workers' wages may potentially influence a worker's effort. Theoretically, we show that an increase in workers' responsiveness to co-workers' wages should lead profit-maximizing firms to compress wages under quite general conditions. Our laboratory experiments, on the other hand, show that --while workers' effort choices are highly sensitive to their own wages-- effort is not affected by co-workers' wages. As a consequence, even though firms in our experiment tended to compress wages when wages became public information, this did not raise their profits. Our experimental evidence therefore provides little support for the notion that inter-worker equity concerns can make wage compression, or wage secrecy, a profit-maximizing policy.

Attitudes Towards Internationalism Through the Lens of Cognitive Effort, Global Mindset, and Cultural Intelligence

In the current study we examine attitudes towards internationalism through the lens of a specific set of constructs necessary in defining an effective global leader. One hundred fifty-nine undergraduates responded to items measuring need for cognition, cultural intelligence,and a set of items measuring the correlates of global mindset. In addition, they provided their attitudes on items measuring internationalism. A series of linear regression analyses revealed cultural intelligence,need for cognition and traveling abroad predicted students’ preference for working full-time in a foreign country. In addition, underclassmen were more likely to endorse the notion that the US culture is superior to other cultures compared to upperclassmen. Results support the importance of exposure to a diverse curriculum in shaping undergraduate students’ global mindset