Production and Operations Management 2026
Contest design for a multi-tier organization: Leveraging informational environment to motivate downstream agents
Abstract
This study examines contests within a multi-tier organization, where the owner offers a prize for subordinate branches to compete, and branch managers subsequently set rewards to motivate their agents. Our main goal is to explore how the owner can steer managerial decisions to better align with her overarching objectives—maximizing agent effort—without undermining managerial autonomy. Drawing on behavioral economics, we propose that the owner can strategically disclose contest-related information to agents to trigger their fairness concerns, prompting managers to voluntarily offer higher rewards and thereby motivating greater effort. Our experimental results largely support this behavioral prediction. Compared to the baseline where agents observe only their own reward, revealing one additional piece of contest information, opponent's reward or managers’ prize, prompts managers to offer larger rewards. However, disclosing both pieces of information does not lead to a further increase in rewards. For agents, receiving a reward higher than their opponent's boosts effort, whereas a perceived unfair reward relative to managers’ prize leads to a significant effort decline. Moreover, when agents know both the prize and the opponent's reward, the vertical fairness concern (tied to the prize) exerts a stronger influence on effort than the horizontal fair concern (based on the opponent's reward).
- DOI
- 10.1177/10591478261460125
- Sources
- openalex