The importance of relative performance feedback information: Evidence from a natural experiment using high school students

We study the effect of providing relative performance feedback information onperformance, when individuals are rewarded according to their absolute performance. Anatural experiment that took place in a high school offers an unusual opportunity to testthis effect in a real-effort setting. For one year only, students received information thatallowed them to know whether they were performing above (below) the class average aswell as the distance from this average. We exploit a rich panel data set and find that theprovision of this information led to an increase of 5% in students grades. Moreover, theeffect was significant for the whole distribution. However, once the information wasremoved, the effect disappeared. To rule out the concern that the effect may beartificially driven by teachers within the school, we verify our results using nationallevel exams (externally graded) for the same students, and the effect remains.

The provision of relative performance feedback information: An experimental analysis of performance and happiness

This paper studies the effect of providing relative performance feedback information onindividual performance and on individual affective response, when agents are rewardedaccording to their absolute performance. In a laboratory set-up, agents perform a realeffort task and when receiving feedback, they are asked to rate their happiness, arousaland feeling of dominance. Control subjects learn only their absolute performance, whilethe treated subjects additionally learn the average performance in the session.Performance is 17 percent higher when relative performance feedback is provided.Furthermore, although feedback increases the performance independent of the content(i.e., performing above or below the average), the content is determinant for theaffective response. When subjects are treated, the inequality in the happiness and thefeeling of dominance between those subjects performing above and below the averageincreases by 8 and 6 percentage points, respectively.

What form of relative performance evaluation?

We study relative performance evaluation in executive compensation whenexecutives have private information about their ability. We assume that thejoint distribution of an individual firm s profit and market movements dependson the ability of the executive that runs the firm. In the equilibrium of theexecutive labor market, compensation schemes exploit this fact to sortexecutives of di ?erent abilities. This implies that executive compensation isincreasing in own performance, but may also be increasing in industryperformance-a sharp departure from standard relative performance evaluation.This result provides an explanation for the scarcity of relative performanceconsiderations in executive compensation documented by the empirical literature.

Inequity version and team incentives

We study optimal contracts in a simple model where employees are averse to inequity as modelled by Fehr and Schmidt (1999). A "selfish" employer can profitably exploit such preferences among its employees by offering contracts which create inequity off-equilibrium and thus, they would leave employees feeling envy or guilt when they do not meet the employer's demands. Such contracts resemble team and relative performance contracts, and thus we derive conditions under which it may be beneficial to form work teams of employees with distributional concerns who were previously working individually. Similar results are obtained for status-seeking and efficiency concerns preferences.

Organizational Choice and Environmental Change

We explain the choice between franchising and vertical integration by estimating a model of relative performance in a sample of 250 Spanish car distributors, controlling for self-selection and including environmental factors. The method allows us to estimate performance counterfactuals. Organizational choice seemingly aims to contain moral hazard for both distributors and manufacturers but it is subject to start-up constraints and switching costs. While the market for franchises remained underdeveloped, information asymmetries led to the opening of integrated outlets. Their subsequent conversion into franchised outlets probably involved prohibitive transaction costs. Consequently, they performed worse than would have been expected had they been independent, as confirmed by the systematic improvement observed when they were in fact converted. The timing of such conversions suggests that switching costs were prohibitive until firms developed a substantial cushion of temporary contracts, previously forbidden by regulation.

Property enforcement as organized consent

This article develops and tests a theory of the institutions that makeproperty rights viable, ensuring their enforcement, mobilizing thecollateral value of assets and promoting growth. In contrast tocontractual rights, property rights are enforced in rem, being affectedonly with the consent of the right holder. This ensures enforcement butis costly when multiple, potentially colliding rights are held in thesame asset. Different institutions reduce the cost of gathering consentsto overcome this trade-off of enforcement benefits for consent costs:recording of deeds with title insurance, registration of rights and evena regimen of purely private transactions. All three provide functionallysimilar services, but their relative performance varies with the numberof transactions, the risk of political opportunism and regulatoryconsistency. The analysis also shows the rationality of allowingcompetition in the preparation and support of private contractswhile requiring territorial monopoly in recording and registrationactivities, this to ensure independence and protect third parties.

Asset pricing implications of benchmarking: A two-factor CAPM

In this paper we consider the equilibrium effects of an institutionalinvestor whose performance is benchmarked to an index. In a partialequilibrium setting, the objective of the institutional investor is modeledas the maximization of expected utility (an increasing and concave function,in order to accommodate risk aversion) of final wealth minus a benchmark.In equilibrium this optimal strategy gives rise to the two-beta CAPM inBrennan (1993): together with the market beta a new risk-factor (that wecall active management risk) is brought into the analysis. This new betais deffined as the normalized (to the benchmark's variance) covariancebetween the asset excess return and the excess return of the market overthe benchmark index. Different to Brennan, the empirical test supports themodel's predictions. The cross-section return on the active management riskis positive and signifficant especially after 1990, when institutionalinvestors have become the representative agent of the market.

Setting standards: Information accumulation in development

We propose a model in which economic relations and institutions in advancedand less developed economies differ as these societies have access to different amounts of information. This lack of information makes it hard to give the right incentives to managers and entrepreneurs. We argue that differences in the amount of information arise because of the differences in the scale of activities in rich and poor economies; namely, there is too little repetition of similar activities in pooreconomies, thus insufficient information to set the appropriate standards for firm performance. Our model predicts a number of institutional and structural transformations as the economy accumulates capital and information.

Let's (not) talk about sex: The effect of information provision on gender differences in performance under competition

We study how gender differences in performance under competition areaffected by the provision of information regarding rival s gender and/ordifferences in relative ability. In a laboratory experiment, we use two tasks thatdiffer regarding perceptions about which gender outperforms the other. Weobserve women s underperformance only under two conditions: 1) tasks areperceived as favoring men and 2) rivals gender is explicitly mentioned. Thisresult can be explained by stereotype-threat being reinforced when explicitlymentioning gender in tasks in which women already consider they are inferior.Omitting information about gender is a safe alternative to avoid women sunderperformance in competition.

Bases cerebrales de la atención sostenida y la memoria de trabajo: un estudio de resonancia magnética funcional basado en el Continuous Performance Test

Introducción. Uno de los paradigmas más utilizados en el estudio de la atención es el Continuous Performance Test (CPT). La versión de pares idénticos (CPT-IP) se ha utilizado ampliamente para evaluar los déficits de atención en los trastornos del neurodesarrollo, neurológicos y psiquiátricos. Sin embargo, la localización de la activación cerebral de las redes atencionales varía significativamente según el diseño de resonancia magnética funcional (RMf) usado. Objetivo. Diseñar una tarea para evaluar la atención sostenida y la memoria de trabajo mediante RMf para proporcionar datos de investigación relacionados con la localización y el papel de estas funciones. Sujetos y métodos. El estudio contó con la participación de 40 estudiantes, todos ellos diestros (50%, mujeres; rango: 18-25 años). La tarea de CPT-IP se diseñó como una tarea de bloques, en la que se combinaban los períodos CPT-IP con los de reposo. Resultados. La tarea de CPT-IP utilizada activa una red formada por regiones frontales, parietales y occipitales, y éstas se relacionan con funciones ejecutivas y atencionales. Conclusiones. La tarea de CPT-IP utilizada en nuestro trabajo proporciona datos normativos en adultos sanos para el estudio del sustrato neural de la atención sostenida y la memoria de trabajo. Estos datos podrían ser útiles para evaluar trastornos que cursan con déficits en memoria de trabajo y en atención sostenida.

Life-time growth patterns of pumpkinseed Lepomis gibbosus introduced to Europe, relative to North American populations

The pumpkinseed Lepomis gibbosus, an omnivorous, nest guarding North American sunfish, was introduced into European waters about 100 years ago. To assess growth performance following introduction, we reviewed the available data for North American and European populations of pumpkinseed and compared the back-calculated age-specific growth for juveniles (standard length, SL, at age two) and adults (age two to five increment) as well as adult body size (SL at age five), von Bertalanffy growth model parameters and the index of growth (in length) performance (φ′). For continental comparisons of growth trajectory, mean growth curves for North American and Europe were calculated with the von Bertalanffy model using pooled data sets for each continent. Juvenile growth rate did not differ between European and North American pumpkinseed, but mean adult body size and adult growth rate were both significantly greater in North American than European populations. Adult body size decreased with increasing latitude (ANOVA) in North American populations, but this was not observed with adult growth rate. In contrast, adult body size tended to increase with latitude in European populations. Adult body size correlated significantly with φ′. The von Bertalanffy model described the overall growth patterns of North American and European populations reasonably well, but on the individual population level, length asymptotes were unrealistic (estimates that were > 20 % of the mean back-calculated size for the oldest age class) for a third of European populations and 80% of the North American populations. In contrast to North American pumpkinseed populations, somatic growth in European populations appears to be compromised by limited, but adequate, food resources, probably due to strong intraspecific interactions. This appears to be especially acute in adults, having potential ramifications for life span and reproductive allocation

Investigating the impact of small versus large firms on economic performance of countries and industries

Following earlier work by Audretsch et al. (2002), we assume that an optimal size-class structure exists, in terms of achieving maximal economic growth rates. Such an optimal structure is likely to exist as economies need a balance between the core competences of large firms (such as exploitation of economies of scale) and those of smaller firms (such as flexibility and exploration of new ideas). Accordingly, changes in size-class structure (i.e., changes in the relative shares in economic activity accounted for by micro, small, medium-sized and large firms) may affect macro-economic growth. Using a unique data base of the EU-27 countries for the period 2002-2008 for five broad sectors of economic activity and four size-classes, we find empirical support which suggests that, on average for these countries over this period, the share of micro and large firms may have been ‘above optimum’ (particularly in lower income EU countries) whereas the share of medium-sized firms may have been ‘below optimum’ (particularly in higher income EU countries). This evidence suggests that the transition from a ‘managed’ to an ‘entrepreneurial’ economy (Audretsch and Thurik, 2001) has not been completed yet in all countries of the EU-27. Keywords: small firms, large firms, size-classes, macro-economic performance