Oliver Gürtler

Feedback in Tournaments under Commitment Problems: Experimental Evidence

We theoretically as well as experimentally analyze tournaments in which one of the agents leads over the other before entering the tournament, that is, in which one of the competitors benefits from a head start. The principal may decide upon informing the agents about the degree of this asymmetry. She cannot commit to giving feedback ex ante or not and, thus, chooses the strategy that is optimal for her ex post. In equilibrium, the principal reveals information if the asymmetry is not too large. Our experimental findings qualitatively confirm our theoretical prediction. Moreover, behavior of the principal and the agents is well aligned to each other.

An Empirical Study on Risk Taking in Tournaments

Individuals faced by a tournament can often not only choose their effort level, but also the risk level of their strategy. There are some theoretical contributions on risk-taking in tournaments, which mainly point out disadvantages with respect to exerted effort. Empirical evidence is rare. This letter analyses the risk-taking behaviour of professional soccer coaches. It is found that risk-taking concerning the kind of observed substitutions is, indeed, relevant. However, risk-taking does not pay off.

Information Policy in Tournaments with Sabotage

Sabotage is one of the main problems of tournament-like reward schemes. Workers who are leading in a tournament are more dangerous rivals, and are therefore sabotaged more heavily. This implies that there is an extra cost to becoming a leader and, hence, to choosing high productive effort in the early stages of a tournament. The incentives to exert productive effort are thereby reduced. We show that this problem can be solved by concealing intermediate information on the performances of workers (i.e., by clever information management). Moreover, we offer experimental evidence indicating that such information management does increase productive efforts.

Sabotage in Tournaments with Heterogeneous Contestants: Empirical Evidence from the Soccer Pitch

In this paper, we address the problem of sabotage in tournaments with heterogeneous contestants. In a first step, we develop a formal model, which yields the prediction that favorites exert higher productive effort, while underdogs are more tempted to engage in destructive actions (sabotage). This is because favorites have a higher return on productive effort and both types of effort are substitutes. In a second step, we use data from German professional soccer to test this prediction. In line with the model, we find that favorite teams win more tackles in a fair way, while underdog teams commit more fouls.

A Rationale for the Coexistence of Central and Decentral Marketing in Team Sports

Abstract In some sports leagues, the sports association sells broadcasting rights centrally in order to create competitive balance. In other ones, the market is decentral. As a result, there is competitive imbalance. In this paper, the preferred kind of marketing of sports associations is analysed. Distinctions are made between three cases. In case one, the sports association is only interested in competitive balance. In the second case, it wishes to create a single high-performing team, and in the third, it maximizes aggregate performance. It is found that, depending on the preferences of the association, both kinds of marketing can be optimal.

The Optimality of Heterogeneous Tournaments

We investigate the effect of employee heterogeneity on the incentive to exert effort in a market-based tournament. External employers use promotion decisions to estimate employees’ abilities and adjust their wage offers accordingly. Employees exert effort to increase the probability of being promoted and thus to increase their ability assessment and wage offer. We demonstrate that ability assessments and wage offers are more sensitive to promotion decisions in the case of heterogeneous employees. Thus, employees have a higher incentive to affect the tournament outcome, and employers find it optimal to hire heterogeneous employees.

On Delegation under Relational Contracts

Abstract In this paper, a principal’s decision between delegating two tasks or handling one of the two tasks herself is analyzed. We assume that there exists no objective performance measure so that the principal must solely rely on relational contracts (informal agreements sustained by the value of future relationships) as an incentive device. It is found that the principal can commit herself to honor the relational contract more effectively if she delegates one task only. This kind of job design is therefore optimal unless the available performance information is rather inaccurate and the discount rate is very low.

Rational self-sabotage

We consider a dynamic tournament where contestants choose a productive effort and to help or sabotage their opponents. Sabotage lowers the output of the victim. Moreover, sabotage imposes an additional direct psychic cost on the victim. Because the current leader is sabotaged most strongly in the final stage, players help other players and even sabotage themselves early on.

The Effect of Reputation on Selling Prices in Auctions

Summary It is often argued in economics that building a reputation for trustworthiness could help individuals or firms to mitigate or even overcome problems of contractual incompleteness. In this paper, we use data from the German eBay website to test whether a seller’s bad reputation has an effect on selling prices. For auctions of popular DVDs at eBay we do indeed find evidence for this hypothesis. We show that an increase in the share of negative ratings of one percentage point decreases the selling price by about 4 per cent. The number of negative ratings, in contrast, does not affect the selling price significantly. Hence, bidders on the eBay marketplace seem to concentrate on relative rather than on absolute measures of reputation. Further, we challenge the recommendation that it is profitable for eBay sellers to let their auction end in the evening, when many potential buyers are supposed to be online. We find that prices are relatively lower in the evening. This may be due to a much higher supply of DVDs in the evening.

Anreize in Turnieren mit heterogenen Teilnehmern — Eine empirische Untersuchung mit Daten aus der Fußball-Bundesliga

ZusammenfassungObwohl in der theoretischen Literatur zu Turnieren vielfach argumentiert wird, dass diese nur dann ihre vollständige Anreizwirkung entfalten, wenn das Teilnehmerfeld annähernd homogen ist, gibt es dazu bislang kaum empirische Befunde. unter Verwendung von Informationen über insgesamt 756 Spiele der 1. Fußball-Bundesliga können wir zeigen, dass die Spielintensität — gemessen anhand der vom jeweiligen Schiedsrichter verhängten Disziplinarmaßnahmen — bei heterogenen Gegnern weniger stark ausgeprägt ist wie bei annähernd ausgeglichenen Mannschaften. Gegeben dieses Resultat sollten Personalverantwortliche bei der Zusammensetzung unternehmensinterner Turniere darauf achten, dass miteinander konkurrierende Mitarbeiter möglichst ähnliche Fähigkeiten aufweisen.SummaryThis paper offers an empirical test of the theoretical proposition that tournaments between heterogeneous contestants are less intense and, hence, lead to lower effort levels than homogenous tournaments. Using a unique dataset from the top tier in German professional football, we show that matches between more heterogeneous teams are less intense: The number of yellow and yellow/red cards that the players receive in a football match is significantly decreasing in the heterogeneity of the competing teams. This finding has a particular implication for the organization of intra-firm tournaments: Managers should group together contestants who are homogenous with regard to their abilities. If this is not possible, managers should handicap the favourites, introduce additional test standards or use alternative incentive devices.