Monetary and social incentives in multi-tasking : the ranking substitution effect

Matthias Stefan, Jürgen Huber, Michael Kirchler, Matthias Sutter, Markus Walzl

Rankings are prevalent information and incentive tools in labor markets with strong competition for talent. In a dynamic model of multi-tasking and an accompanying experiment with financial professionals, we identify hidden ranking costs when performance in one task is incentivized and ranked while another prosocial task is not: (i) a ranking influences behavior if individuals lag behind: they spend more total effort and substitute effort in the prosocial task with effort in the ranked task; (ii) those ahead in the ranking spend less total effort and lower relative effort in the ranked task. Implications for incentive schemes are discussed.

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Year of publication:	May 2020
Authors:	Stefan, Matthias ; Huber, Jürgen ; Kirchler, Michael ; Sutter, Matthias ; Walzl, Markus
Publisher:	Bonn : Max Planck Institute for Research on Collective Goods
Subject:	multi-tasking decision problem \| rank incentives \| framed field experiment \| finance professionals \| Ranking-Verfahren \| Ranking method \| Theorie \| Theory \| Anreiz \| Incentives \| Leistungsanreiz \| Performance incentive \| Feldforschung \| Field research \| Experiment \| Prinzipal-Agent-Theorie \| Agency theory