Honest and ethical behavior within organizations is of paramount importance, not only for the organizations involved but also for stakeholders and society as a whole. It therefore comes as no surprise that the popular press as well as the academic literature abound with stories of unethical conduct, fraud or deception and with proposed mechanisms to constrain such phenomena. One aspect of unethical conduct which has received particular attention in the literature is sabotage, defined as ‘any (costly) actions that one worker takes that adversely affect the output of another’ (Lazear, 1989). This definition is particularly relevant in the context of tournaments and personnel economics, because it embodies the idea that employees within an organization very often compete – implicitly or explicitly – against each other for promotions, bonuses, and the like. It has been shown that, in an environment in which workers have the opportunity to evaluate each other and hence to engage in strategic sabotage, efficiency is compromised due to a combination of output destruction through sabotage and lower performance by workers in anticipation of sabotage by others (Carpenter et al., 2010).1 Sabotage in the form of destroying, reducing or under-reporting the output of one’s co-workers is not the only potential threat to ethical behavior and in particular truthful information transmission in organizations. Misreporting can also take the form of inflating one’s performance, for instance when individual piece rates or targets are used to determine payments (Cadsby et al., 2010; Conrads et al., 2013). Moreover, let us consider the possibility that, in certain cases, workers may have incentives to over-report the output of their colleagues. This kind of behavior may entail severe efficiency losses, arising if the management must make decisions based on false information about the performance, risk outlook, or financial viability of various teams, units, or divisions of a firm. The propensity of an organization’s employees to engage in untruthful reporting is likely to depend on the incentives – typically in the form of incentive-based compensation – provided by the management. Broadly speaking, one can distinguish between three classes of incentive schemes: (i) individual schemes, which include flat payments but can also condition one’s compensation on her own performance through piece rates or target-based payments, (ii) competitive schemes, in which part of an employee’s compensation depends on her performance relative to other employees using tournament-like incentives, typically within a team or organizational unit, and (iii) collective or team-based schemes, which condition part of one’s payment on the performance of a group using team incentives like bonuses based on achieving team targets, or even payment schemes directly tying individual payments on the overall success of (a unit of) the organization.