Sabotage in Tournaments: Evidence from a Laboratory Experiment

TLDR

Although relative performance schemes are pervasive in organizations, reliable empirical data on induced sabotage behavior are almost nonexistent. The study investigates sabotage in repeated laboratory tournaments, examining how higher wage spreads increase effort and sabotage. The authors conduct a controlled laboratory experiment with repeated tournaments to measure effort and sabotage under varying wage spreads. Higher wage spreads raise effort and sabotage; agents respond to higher wages with more effort even under tournament incentives; labeling sabotage reduces destructive activity; communication and flat prize structures curb sabotage; and when sabotage is impossible, principals choose tournament incentives more often. Accepted by Peter Wakker, decision analysis.

Abstract

Although relative performance schemes are pervasive in organizations, reliable empirical data on induced sabotage behavior are almost nonexistent. We study sabotage in repeated tournaments in a controlled laboratory experiment and observe that effort and sabotage are higher for higher wage spreads. Additionally, we find that also in the presence of tournament incentives, agents react reciprocally to higher wages by exerting higher effort. Destructive activities are reduced by explicitly calling them by their name “sabotage.” Communication among principal and agents can curb sabotage when they agree on flat prize structures and increased output. If sabotage is not possible, the principals choose tournament incentives more often. This paper was accepted by Peter Wakker, decision analysis.