| Meier, Volker (2001): Setting Incentives: Temporary Performance Premiums Versus Promotion Tournaments. CESifo Working Paper, 432 |
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External fulltext: http://hdl.handle.net/10419/75868
Abstract
Two alternative relative compensation schemes are compared with respect to total output that can be generated at a given sum of salaries. While the promotion regime guarantees that any salary increase is permanent, the premium system allows a reduction in the income of an agent to the base salary after one period. It is shown that the optimum promotion tournament system induces a higher total output than the optimum premium system. This result occurs because a promotion regime allows distortion in a contest in favor of winners of previous contests.
| Item Type: | Paper (Discussion Paper) |
|---|---|
| Faculties: | Economics Economics > Chairs > Chair for Public Economics |
| Subjects: | 300 Social sciences > 330 Economics |
| Language: | English |
| ID Code: | 19188 |
| Deposited On: | 15. Apr 2014 08:48 |
| Last Modified: | 29. Apr 2016 09:16 |
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