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UrinalysisWhat potty training reveals about excessive executive salaries.

By Tim HarfordPosted Saturday, Jan. 13, 2007, at 6:52 AM ET

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Unfortunately, as Lazear and Rosen were well aware, tournaments also have unwelcome features. They discourage cooperation: One study of Australian companies discovered that workers facing tournament-style pay structures were less likely to call in sick, but also less likely to share tools with each other.

Still, tournament theory explains a lot about office politics and the inequities of working life. The CEO's pay, it turns out, is not designed to motivate him but to motivate potential successors. Think of it as a sort of "lifetime achievement" award for somebody whose productive contribution is long over.

Since we did not have twins, I will not be able to put tournament theory into practice at home. Perhaps the idea is a little potty anyway.

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Tim Harford is a columnist for the Financial Times. He is the author of The Undercover Economist, and his latest book is The Logic of Life.
Photograph of potty on Slate's home page by Ryan McVay.
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