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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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
Depositing User: Pure Connector
Date Deposited: 26 Sep 2013 00:55
Last Modified: 22 Dec 2022 11:32
DOI: 10.1016/j.jebo.2010.03.019

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