Sabotage in Tournaments: Evidence from a Laboratory Experiment

Abstract

Although relative performance schemes are pervasive in organizations reliable empirical data on induced sabotage behavior is almost non-existent. We study sabotage in tournaments in a controlled laboratory experiment and are able to confirm one of the key insights from theory: effort and sabotage increase with the wage spread. Additionally, we find that even in the presence of tournament incentives, agents react reciprocally to higher wages, which mitigates the sabotage problem. Destructive activities are reduced by explicitly calling them by their name 'sabotage'. Communication among principal and agents curbs sabotage due to agreements on flat prize structures and increased output.

Keywords: sabotage, tournament, reciprocity, relative performance scheme, experiment

JEL Classification: M52, J33, J41, L23, C72, C91