Keith Weigelt

Asymmetric Tournaments, Equal Opportunity Laws, and Affirmative Action: Some Experimental Results

This paper assesses whether affirmative action programs and equal opportunity laws affect the output of economic agents. More precisely, we find that equal opportunity laws and affirmative action programs always benefit disadvantaged groups. Equal opportunity laws also increase the effort levels of all subjects and hence the profits of the tournament administrator (usually the firm). The effects of affirmative action programs depend on the severity of a groups cost disadvantage. When the cost disadvantage is severe, these programs significantly increase effort levels (and hence profits). The opposite is true when the disadvantage is slight.

Multiperson Tournaments: An Experimental Examination

Modern hierarchical organizations, like corporations, must motivate agents to work hard. Given their pyramid structure, it is not surprising that one commonly used motivator is the promotion tournament. In such tournaments, agents compete to advance to positions at higher organizational levels. Though these tournaments are common, little research has empirically looked at the interface of organizational structure and tournament design. This paper aims to take a step in filling this void by comparing the performance of various tournament designs using controlled laboratory techniques.

An empirical examination of advertising as a signal of product quality

Abstract Using data from the U.S. automobile industry we test for evidence consistent with game-theoretic models of advertising and quality signalling. We find that manufacturers use both price and advertising to signal the quality of their products; when price exceeds the full information case, manufacturers use above average levels of advertising. We also find a positive association between higher future sales and current advertising levels for automobile models. These results are consistent with game-theoretic signalling models and reported management practices.

A Test of the Resource‐Based Model Using Baseball Free Agents

This paper examines a nearly untested premise of the resource-based view of the firm: managers can exploit uncertainty about a factors true value to generate returns. Our results show that empirically validating this basic proposition is difficult and potentially impossible, despite our use of a rather simple empirical setting. While market imperfections appear to underlie the payment of baseball free agents, we cannot easily determine whether this imperfection constitutes a return or not. In addition, while we find convincing evidence of uncertainty underlying owners expectations of a free agents performance potential, it is not clear whether team owners can exploit this uncertainty by amassing superior informational strategies or investing in complementary assets. Our difficulty in testing resource-based propositions suggests limitations to the theorys practicality. Copyright (c) 2000 Massachusetts Institute of Technology.

Product location choice and firm capabilities: evidence from the U.S. automobile industry

We test theories of product differentiation and firm capabilities using data from the U.S. automobile industry. We find managers introduce new models close to their existing ones but far from rival models. We also find entrants and foreign manufacturers locate models closer to rival models. These results are consistent with both economic models of product differentiation and theories of firm capabilities Copyright

A game theory analysis of dual discrimination

Abstract A series of experiments with undergraduate management students was conducted to examine the behavioral effects of situations with dual discrimination in an incentive compensation scheme. Subjects were randomly assigned to a disadvantaged or advantaged status and simultaneously were discriminated for or against, in a two-person tournament. A game theoretic model was used to predict the choices subjects in the two conditions of dual discrimination would make if they attempted to maximize monetary outcomes. Results indicated that while the theory of tournaments was capable of predicting the pattern of results, subjects tended to expend more effort than predicted. The implications of these results for the theory and for public policy are discussed.

Trust Among Strangers

The trust building process is basic to social science. We investigate it in a laboratory setting using a novel multi-stage trust game where social gains are achieved if players trust each other in each stage. And in each stage, players have an opportunity to appropriate these gains or be trustworthy by sharing them. Players are strangers because they do not know the identity of others and they will not play them again in the future. Thus there is no prospect of future interaction to induce trusting behavior. So, we study the trust building process where there is little scope for social relations and networks. Standard game theory, which assumes all players are opportunistic, untrustworthy, and should have zero trust for others is used to construct a null hypothesis. We test whether people are trusting or trustworthy and examine how inferring the intentions of those who trust affects trustworthiness. We also investigate the effect of stake on trust, and study the evolution of trust. Results show subjects exhibit some degree of trusting behavior though a majority of them are not trustworthy and claim the entire social gain. Players are more reluctant to trust in later stages than in earlier ones and are more trustworthy if they are certain of the trustee’s intention. Surprisingly, subjects are more trusting and trustworthy when the stake size increases. Finally, we find the sub- population who invests in initiating the trust building process modifies its trusting behavior based on the relative fitness of trust.