Date of Award

Spring 4-28-2020

Degree Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Accountancy

First Advisor

Michael Majerczyk

Second Advisor

Ivo Tafkov

Third Advisor

Curtis Mullis

Fourth Advisor

Tyler Thomas

Abstract

I experimentally investigate the impact of the level and salience of the ability heterogeneity on the effectiveness of relative performance information (RPI) on individual performance in tournaments. In my setting, the first stage is used to sort out the task abilities while the second stage consists of a tournament. My primary dependent variable is the effectiveness of the RPI provided at the end of the first stage, captured by the change of individual performance over the stages. Consistent with my predictions, I find that RPI’s effectiveness is more positive when the ability heterogeneity is low and salient than when it is high and salient, because the knowledge of ability heterogeneity influences participants’ performance expectations. I also find that RPI’s effectiveness is more positive when the ability heterogeneity is low and salient than when it is not salient, because both high and low performers attach greater value to the tournament outcomes in the former situation. Moreover, I find that RPI’s effectiveness is not more negative when the ability heterogeneity is high and salient than when it is not salient, as unequal competitions might give rise to additional value in winning the tournament. Finally, I find that performance reduction in low performers is smaller than that in high performers, once the ability heterogeneity become salient and low. My results suggest that when RPI is present, its effectiveness depends on the ability heterogeneity and its saliency that firms should consider when designing effective tournaments.

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