| By: |
Christoph March;
Marco Sahm |
| Abstract: |
We investigate overlapping contests in multi-divisional organizations in which
an individual’s effort simultaneously determines the outcome of several
contests on different hierarchical levels. We show that individuals in smaller
units are advantaged in the grand (organization-wide) contest for two reasons:
First, the incentive to free-ride is smaller in inter-divisional contests.
Second, competition in the intra-divisional contest is less fierce. Both
effects induce a higher marginal utility of effort provision. We test the
model in a laboratory experiment and confirm its main predictions. Our results
have important consequences for the provision of incentives in organizations
and the design of sports competitions. |
| Keywords: |
contest, rent-seeking, hierarchy, teams, experiment |
| JEL: |
C72 C92 D72 |
| Date: |
2019 |
| URL: |
http://d.repec.org/n?u=RePEc:ces:ceswps:_7994&r=all |