"What do we know about "tournaments" as performance incentives in organisations?"

Why is there a compensation disparity between the CEO and the next level of executives? Typically suggested reasons are the CEO’s ability to set their own pay or the high competition for top management talents. Professor Martin Holmén will focus on another possible reason for the compensation disparity: tournament incentives. In a typical rank-order tournament, the best relative performer is promoted to the next level in the hierarchy, while the others are passed over. 

Promotion to the next level carries with it higher pay and therefore provides managers with an incentive to expend higher effort, which, in turn, increases their chances of promotion as well as the firm's output.

In the guest lecture Prof. Holmén will discuss what we know about tournament incentives in general and present a framework related to mutual fund tournaments. Finally, he will discuss the results from a laboratory asset-market experiment where traders have tournament incentives.

The event is open for all interested. Welcome!

Organiser: HCCG