We analyze the optimal combination of promotion tournaments and individualperformance pay in an employment relationship. An agent's effort is non-observable and he has private information about his suitability for promotion. We find thatthe principal does not provide individual incentives if it...

Generally, Democrats do not increase military spending, and Republicans do not raise welfare payments. Mostly, ruling politicians stick to the manifesto of their party. The current paper provides a theoretical explanation for this phenomenonthat does not assume politicians or voters to be...

In an information cascade experiment participants are confronted with artificial predecessors predicting in line with the BHW model (Bikchandani et al.,1992). Using the BDM (Becker et al., 1964) mechanism we study participants'probability perceptions based on maximum prices for participating in...

In this paper, I offer a theoretical explanation of the robust gender differences in educational achievement distributions of school children. I consider a one shot cheap talk game with two different types of senders (biased teachers and fair teachers), two types of receivers ("normal" and...

Does gender play a role in the context of team work? Our results based on areal-effort experiment suggest that performance depends on the composition of theteam. We find that female and male performance di¤er most in mixed teams withrevenue sharing between the team members, as men put in...

The Peter Principle captures two stylized facts about hierarchies: first, promotions often placeemployees into jobs for which they are less well suited than for that previously held. Second,demotions are extremely rare...

Teamwork and cooperation between workers can be of substantial value to a firm, yet thelevel of worker cooperation often varies between individual firms. We show that thesedifferences can be the result of labor market competition if workers have heterogeneouspreferences and preferences are...

By using short-term direct finance firms of the highest credit quality exposethemselves to rollover risk in the public debt markets. Firms insure themselvesagainst this risk by securing backup lines of credit from banks that they mayuse should market liquidity dry up. In a first step, this paper...

We analyse pricing, e¤ort and tipping decisions in the online service GoogleAnswers. While users set a price for the answer to their question ex ante, theycan additionally give a tip to the researcher ex post.In line with the related experimental literature we …nd evidence that tippingis...

Recent literature has questioned the existence of a learning foundationfor the partially cursed equilibrium. This paper closes the gap by showingthat a partially cursed equilibrium corresponds to a particular analogy-based expectation equilibrium.