Measuring Welfare and Spillover Effects of Ranking Information

Abstract

Ranking information is often provided to improve task performance, yet its welfare and spillover effects are rarely measured. We measure these effects in a controlled laboratory experiment, in which participants conduct a simple cognitive task and report their willingness-to-pay (WTP) to receive or avoid private ranking information, and for a partial or full public announcement of the ranking information, both unconditionally and conditional on the realized rankings. The results show that although modest performance improvements are achieved by providing ranking information, low-performing individuals do bear utility losses under a full public announcement, whereas in other cases individuals mostly enjoy significant utility gains from both social comparison and social recognition. Estimates from the structural model show that all the ranking information provision schemes we consider bring positive net emotional effects for our sample. Finally, we find that partially announcing the rankings in the cognitive task increases contribution levels in a public good game played afterward; however, no spillover effects are found in a subsequent coordination game or Vendetta game.