Interpersonal comparison, status and ambition in organizations

Ederer, Florian and Patacconi, Andrea (2010) Interpersonal comparison, status and ambition in organizations. Journal of Economic Behavior & Organization, 75 (2). pp. 348-363.

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    Abstract

    This paper shows that introducing status concerns into a tournament model has substantial implications for the provision of incentives. We emphasize the role of reference groups and determine the optimal number of winners and losers in tournaments. To compensate employees for the disutility of low status, a profit-maximizing employer may be reluctant to demote employees and instead reward workers through promotions. This rationalizes the prevalence of compensation systems which reward winners without explicitly identifying losers. Differences in ambition and ability affect contestants’ efforts and may result in inefficient promotion outcomes. We analyze how to mitigate these inefficiencies when managing a diverse workforce by using mixed and segregated tournaments

    Item Type: Article
    Faculty \ School: Faculty of Social Sciences > Norwich Business School
    Related URLs:
    Depositing User: Pure Connector
    Date Deposited: 26 Sep 2013 01:55
    Last Modified: 19 Oct 2018 00:52
    URI: https://ueaeprints.uea.ac.uk/id/eprint/43476
    DOI: 10.1016/j.jebo.2010.03.019

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