We show that incompetitive careers based on individual performance the least productive individuals may have the highest probabilities to be promoted to top positions. These individuals have the lowest fall-back positions and, hence, the highest incentives to succeed in career contests. This...

We discuss a principal-agent model in which the principal has the opportunity to include a non-compete agreement in the employment contract. We show that not imposing such an agreement can be beneficial for the principal as the possibility to leave the firm generates implicit incentives for the...

This paper discusses the strategic role of mismatching, where players voluntarily form inefficient teams or forego the formation of efficient teams, respectively. Strategic mismatching can be rational when players realize a competitive advantage (e.g. harming other competitors). In addition, the...

We introduce a concept of emotions that emerge when workers compare their own performance with a given standard or with the performances of co-workers. Assuming heterogeneity among the workers the interplay of emotions and incentives is analyzed by focusing on three incentive schemes that are...

Rank-order tournaments are usually modeled simultaneously. However, real tournaments are often sequentially. We show that agents' strategic behavior significantly differs in sequential tournaments compared to simultaneous tournaments. In a sequential tournament, under certain conditions the...

We introduce a concept of emotions that emerge when agents compare their own performance with the performances of other agents. Assuming heterogeneity among the agents the interplay of emotions and incentives is analyzed within the framework of rank-order tournaments, which are frequently used...

A tournament is examined in which two agents with different abilities choose efforts as well as risks. According to the previous literature, the more (less) able agent should choose a low (high) risk strategy, because the first one does not want to imperil his favorable position, whereas the...

According to the Merger Guidelines, the Antitrust Authority has to challenge an anticompetitive merger. These guidelines, however, neglect the parties' litigation costs during trial. We analyze under which circumstances these costs are so high that the agency's intervention is inefficient.

Empirical findings show that firms frequently employ overeducated workers. Since overeducated workers earn more than adequately educated ones working in similar jobs these findings seem to be puzzling. In this paper, we introduce an insurance approach to explain the employment of overeducated...