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The impact of management incentives in intergroup contests |
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| Affiliation: | 1. Department of Political Science and International Relations, Seoul National University, South Korea;2. Department of Public Economics, University of Innsbruck, Austria;3. School of Foreign Service in Qatar, Georgetown University, Qatar;4. PGIM Fixed Income – Global Macroeconomic Research, United States;5. Department of Economics, Brown University, United States;6. Department of Economics, University of Cologne, and Department of Public Economics, University of Innsbruck, Austria |
| Abstract: | In intergroup contests a manager advises and motivates her group’s members. Her rewards often depend on the subsequent contest expenditure of the members. I test whether such incentives undermine the credibility and effectiveness of a manager’s efforts. In the different experimental treatments the managers either benefit from very high or low expenditure or get a predetermined payment. The results show that different management incentives shape the expenditure of the group members even if managers have an advisory role only. However, group members follow recommendations more closely if management compensation is not linked to contest expenditures. |
| Keywords: | Communication Experiment Rent-seeking Management compensation Group decision making |
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