Assignments Lecture 6 on Personnel Economics 2016-2017
Cijfer/Grade: 7
Assignment tournament model:
a. What are the basic characteristics of a tournament like pay system (Lazear & Gibbs)?
According to Lazear & Gibbs (2015) one of the characteristics of a tournament is that the firm
promotes a fixed number of employees (often, only one) who have the best performance. So
tournaments are necessary when job slots are fixed (Lazear & Gibbs, 2015). Tournaments also
give better control over the number of employees that are promoted. Another characteristic of
a tournament is that it is most desirable when it is more costly for a firm to alter the structure
of the hierarchy.
One of the disadvantages of a tournament like Lazear & Gibbs mentioned is that the quality is
variable. In fact the workers are promoted on the basis of an evaluation of their relative
performance instead of their absolute performance. In these situations it means that
promotions are a relative gain. And because tournaments are a form of RPE, Lazear & Gibbs
stated that they usually distort incentives away from cooperation and toward sabotage of
coworkers.
An advantage of a tournament is that the evaluation is easier than for a standard. As Lazear &
Gibbs (2015) explains that the firm does not need to decide how much better performance is
and only the order matters, but not the distance between competitors. Moreover, because the
top performers are often easy for everyone to determine, employees may consider the
tournament outcome to be more objective (Lazear & Gibbs, 2015).
1
Cijfer/Grade: 7
Assignment tournament model:
a. What are the basic characteristics of a tournament like pay system (Lazear & Gibbs)?
According to Lazear & Gibbs (2015) one of the characteristics of a tournament is that the firm
promotes a fixed number of employees (often, only one) who have the best performance. So
tournaments are necessary when job slots are fixed (Lazear & Gibbs, 2015). Tournaments also
give better control over the number of employees that are promoted. Another characteristic of
a tournament is that it is most desirable when it is more costly for a firm to alter the structure
of the hierarchy.
One of the disadvantages of a tournament like Lazear & Gibbs mentioned is that the quality is
variable. In fact the workers are promoted on the basis of an evaluation of their relative
performance instead of their absolute performance. In these situations it means that
promotions are a relative gain. And because tournaments are a form of RPE, Lazear & Gibbs
stated that they usually distort incentives away from cooperation and toward sabotage of
coworkers.
An advantage of a tournament is that the evaluation is easier than for a standard. As Lazear &
Gibbs (2015) explains that the firm does not need to decide how much better performance is
and only the order matters, but not the distance between competitors. Moreover, because the
top performers are often easy for everyone to determine, employees may consider the
tournament outcome to be more objective (Lazear & Gibbs, 2015).
1
