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- W4245576120 abstract "Abstract The tournament theory of wages explains a system of awarding promotions and bonuses based on the relative productivity of workers, rather than their absolute productivity. It is particularly useful in explaining large pay differences between different hierarchical levels of a firm that may not be justified by marginal productivity differences. A large “prize”, such as a pay increase upon promotion, can motivate extra effort by those workers competing for the prize. Theory would predict that workers increase their productivity to the point where the marginal cost of exerting extra effort in the present is equal to or less than the discounted expected value of the pay increase associated with promotion or a future bonus. The firm, on the other hand, must set the wage differentials between hierarchical levels appropriately to induce optimal employee effort and maximize profits." @default.
- W4245576120 created "2022-05-12" @default.
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- W4245576120 date "2015-01-21" @default.
- W4245576120 modified "2023-10-16" @default.
- W4245576120 title "Tournament Theory" @default.
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- W4245576120 doi "https://doi.org/10.1002/9781118785317.weom080093" @default.
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