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Journal Articles Managerial and Decision Economics Year : 2016

Principal-agent and peer relationships in tournaments

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.

Dates and versions

hal-02104241 , version 1 (19-04-2019)

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Gerald Eisenkopf, Sabrina Teyssier. Principal-agent and peer relationships in tournaments. Managerial and Decision Economics, 2016, 37 (2), pp.127-139. ⟨10.1002/mde.2698⟩. ⟨hal-02104241⟩
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