A Crowding-out Effect for Relative Income (2008)

The risk of external interventions crowding-out intrinsic motivation has long been established in economics. This paper introduces a new dimension by arguing that a crowding-out effect does become possible if individuals receive higher relative compensation. Using a unique, large data set that focuses on 26 seasons in basketball (NBA) we find empirical support for a relative crowding-out effect. Performance is reduced as a reaction to a relative income advantage.

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Frey Bruno S., Schaffner Markus, Schmidt Sascha L., Torgler Benno