Feedback and Motivation in Dynamic Tournaments

We investigate the choice to conduct interim performance evaluations in a dynamic tournament. When a worker’s ability does not influence the marginal benefit of effort, the choice depends on the shape of the cost of effort function. When effort and ability are complementary, feedback has several competing effects: it informs workers about their relative position in the tournament (evaluation effect) as well as their relative productivity (motivation effect) and it creates signal-jamming incentives to exert effort prior to the performance evaluation. These effects suggest a tradeoff of performance feedback between evaluation and motivation which is in accordance with organizational behavior research and performance appraisal practices.