Description
Contests are commonly used in the workplace to motivate workers, determine promotion, and assign bonuses. Although contests can be very effective at eliciting high effort, they can also lead to inefficient effort expenditure (overbidding).
Researchers have proposed various theories to explain overbidding in contents, including mistakes, systematic biases, the utility of winning, and relative payoff maximization. Using an eight-part experiment, we test and find significant support for the existing theories. Also, we discover new explanations based on cognitive ability and impulsive behavior. Out of all explanations examined, we find that impulsivity is the most important factor explaining overbidding in contests.
Roman Sheremeta, Assistant Professor of Economics at Weatherhead School of Management, Case Western Reserve University, “The best Ukrainian Economist” according to Ukrainian Forbes 2015, “Top 40 under 40 Business Professors” nominee and “Top young economist” according to IDEAS 2018 will present his paper “Why are we so competitive?”
Language: English
