2018/02/13 by David Gill, Zdenka Kissová, Jaesun Lee +1 · 158 citations
Decision Sciences · Mathematics · Psychology · Social Sciences · #Artificial intelligence #Business #Combinatorics #Computer science #Decision-Making and Behavioral Economics #Distribution (mathematics) #Economics #Experimental Behavioral Economics Studies #Function (biology) #Game Theory and Applications #Incentive #Law #Leverage (statistics) #Marketing #Mathematics #Microeconomics #Order (exchange) #Political science #Politics #Promotion (chess) #Psychology #Rank (graph theory) #Social psychology
paper · doi:10.1287/mnsc.2017.2907
published in Management Science 65(2), 494-507 (Institute for Operations Research and the Management Sciences)
openalex publication_date 2018/02/13 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/31
Rank-order relative-performance evaluation, in which pay, promotion, symbolic awards, and educational achievement depend on the rank of individuals in the distribution of performance, is ubiquitous. Whenever organizations use rank-order relative-performance evaluation, people receive feedback about their rank. Using a real-effort experiment, we aim to discover whether people respond to the specific rank that they achieve. In particular, we leverage random variation in the allocation of rank among subjects who exerted the same effort to obtain a causal estimate of the rank response function that describes how effort provision responds to the content of rank-order feedback. We find that the rank response function is U-shaped. Subjects exhibit “first-place loving” and “last-place loathing”: that is, subjects work hardest after being ranked first or last. We discuss implications of our findings for the optimal design of performance feedback policies, workplace organizational structures, and incentives schemes. Data and the supplementary web appendix are available at 10.1287/mnsc.2017.2907 . This paper was accepted by Uri Gneezy, behavioral economics.