Principal‐agent and Peer Relationships in Tournaments |
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| Authors: | Gerald Eisenkopf Sabrina Teyssier |
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| Affiliation: | 1. Thurgau Institute of Economics, Kreuzlingen, Switzerland;2. Department of Economics, University of Konstanz, Konstanz, Germany;3. INRA, UR1303 ALISS, Ivry‐sur‐Seine, France;4. Department of Economics, Ecole Polytechnique, Palaiseau, France |
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| Abstract: | Effort provision in tournaments may depend on both social preferences towards the competitor and social preferences towards the principal who designed the tournament. In a laboratory experiment, we analyze agents' behavior in different tournament settings that vary the distribution of the prize between agents. The principal chooses between a low and a high guaranteed payment. Standard economic theory predicts the same effort provision in all situations. Instead, our results show that both the generosity of the principal and the strict separation between winner and loser increase the effort level in tournaments. Moreover, agents focus their preferences either on the principal or on the agent. Copyright © 2014 John Wiley & Sons, Ltd. |
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