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Killer incentives: status competition and pilot performance during World War II


Ager, Philipp; Bursztyn, Leonardo; Voth, Hans-Joachim (2017). Killer incentives: status competition and pilot performance during World War II. NBER Working papers 22992, National Bureau of Economic Research.

Abstract

A growing theoretical and empirical literature shows that public recognition can lead employees to exert greater effort. However, status competition is also associated with excessive expenditure on status goods, greater likelihood of bankruptcy, and more risk taking by money managers. This paper examines the effects of recognition and status competition jointly. In particular, we focus on the spillover effects of public recognition on the performance and risk taking of peers. Using newly collected data on monthly “victory” scores of more than 5,000 German pilots during World War II, we find that status competition had important effects: After the German armed forces bulletin mentioned the accomplishments of a particular fighter pilot, his former peers performed considerably better. This outperformance varied across skill groups. When a former squadron peer was mentioned, the best pilots tried harder, scored more, and died no more frequently; in contrast, average pilots won only a few additional victories but died at a significantly higher rate. Hence our results show that the overall efficiency effect of nonfinancial rewards can be ambiguous in settings where both risk and output affect aggregate performance.

Abstract

A growing theoretical and empirical literature shows that public recognition can lead employees to exert greater effort. However, status competition is also associated with excessive expenditure on status goods, greater likelihood of bankruptcy, and more risk taking by money managers. This paper examines the effects of recognition and status competition jointly. In particular, we focus on the spillover effects of public recognition on the performance and risk taking of peers. Using newly collected data on monthly “victory” scores of more than 5,000 German pilots during World War II, we find that status competition had important effects: After the German armed forces bulletin mentioned the accomplishments of a particular fighter pilot, his former peers performed considerably better. This outperformance varied across skill groups. When a former squadron peer was mentioned, the best pilots tried harder, scored more, and died no more frequently; in contrast, average pilots won only a few additional victories but died at a significantly higher rate. Hence our results show that the overall efficiency effect of nonfinancial rewards can be ambiguous in settings where both risk and output affect aggregate performance.

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Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Language:English
Date:March 2017
Deposited On:09 Feb 2018 08:52
Last Modified:14 Mar 2018 17:46
Series Name:NBER Working papers
Number of Pages:48
Additional Information:Revised version
OA Status:Green
Free access at:Official URL. An embargo period may apply.
Publisher DOI:https://doi.org/10.3386/w22992
Official URL:https://www.dropbox.com/s/wppwgltxymyjupc/v4.2.pdf?dl=0
Related URLs:http://www.nber.org/papers/w22992 (Publisher)

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