An experimental study on tournament design

Harbring, Christine; Irlenbusch, Bernd

doi:10.1016/s0927-5371(03)00034-4

Cited by 170 publications

(122 citation statements)

References 27 publications

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“…However, when the noise is low (DET-L), subjects expend average effort of 62.4, which is lower than the equilibrium effort of 70.7 (two-tailed Wilcoxon test, p-value = 0.03). This is a surprising result, since previous studies find that efforts in deterministic winnertake-all contests (rank-order tournaments) are usually either higher or not significantly different from theoretical benchmarks (Bull et al, 1987;Harbring and Irlenbusch, 2003;Eriksson et al, 2009). The major difference of our study is the use of multiplicative noise to adjust individual final performance (Gerchak and He, 2003), whereas all other experimental studies employ additive noise (Lazear and Rosen, 1981).…”

Section: Overviewmentioning

confidence: 77%

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Winner-take-all and proportional-prize contests: Theory and experimental results

Cason

Masters

Sheremeta

2020

Journal of Economic Behavior & Organization

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This study provides a unified framework to compare three canonical types of contests: winnertake-all contests won by the best performer, winner-take-all lotteries where probability of success is proportional to performance, and proportional-prize contests in which rewards are shared in proportion to performance. We derive equilibria and observe outcomes from each contest in a laboratory experiment. Equilibrium and observed efforts are highest in winner-takeall contests. Lotteries and proportional-prize contests have the same Nash equilibrium, but empirically, lotteries induce higher efforts and lower, more unequal payoffs. Behavioral deviations from theoretical benchmarks in different contests are caused by the same underlying attributes, such as risk-aversion and the utility of winning. Finally, we find that subjects exhibit consistent behavior across different types of contests, with subjects exerting higher effort in one contest also exerting higher effort in another contest.JEL Classifications: C72, D72, D74, J33

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Section: Overviewmentioning

confidence: 77%

“…The most commonly used distribution in the experimental contest literature is uniform and the most commonly used cost function is quadratic (Bull et al, 1987;Harbring and Irlenbusch, 2003;Eriksson et al, 2009;Agranov and Tergiman, 2013). Therefore, we assume that and are i.i.d.…”

Section: The Theoretical Modelmentioning

confidence: 99%

Winner-take-all and proportional-prize contests: Theory and experimental results

Cason

Masters

Sheremeta

2020

Journal of Economic Behavior & Organization

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“…A second category of experimental work which is related to our study is constituted by experimental studies on tournament incentive schemes (see for example BULL, SCHOTTER, and WEIGELT 1987, VAN DIJK, SONNEMANS, and VAN WINDEN 2001, HARBRING and IRLENBUSCH 2003, ORRISON, SCHOTTER, and WEIGELT 2004, HARBRING and IRLENBUSCH 5 ISAAC, WALKER, and THOMAS (1984 invite experienced participants back to the laboratory and find that behaviour of experienced and inexperienced subjects is basically the same. A similar restart effect is observed by CROSON (1996).…”

Section: Introductionmentioning

confidence: 99%

Relative rewards within team-based compensation

Irlenbusch

Ruchala

2008

Labour Economics

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How to design compensation schemes to motivate team members appears to be one of the most challenging problems in the economic analysis of labour provision. We shed light on this issue by experimentally investigating team-based compensations with and without bonuses awarded to the highest contributors in teams. A purely team-based compensation scheme induces agents to voluntarily cooperate while introducing an additional relative reward increases effort and efficiency only when the bonus is substantial. In this case, however, the data suggests that tournament competition crowds out voluntary cooperation within a team.

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“…In fixed prize tournaments contestants can engage in collusive behavior by jointly reducing their effort, or in sabotage by taking actions to reduce each other's performance, knowing that the full prize will be paid out anyway (Harbring and Irlenbusch, 2003;Bandiera et al, 2005;Harbring et al, 2007). If the size of the prize (positively) depends on the agents' joint output, both collusion and sabotage are less attractive, because they lead to a smaller prize.…”

Section: Introductionmentioning

confidence: 99%

Tournaments and piece rates revisited: a theoretical and experimental study of output-dependent prize tournaments

Güth¹,

Levı́nský²,

Pull

et al. 2015

Rev Econ Design

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Tournaments represent an increasingly important component of organizational compensation systems. While prior research focused on fixed-prize tournaments where the prize to be awarded is set in advance, we introduce 'output-dependent prizes' where the tournament prize is endogenously determined by agents' output -it is high when the output is high and low when the output is low. We show that tournaments with output-dependent prizes outperform fixed-prize tournaments and piece rates. A multi-agent experiment supports the theoretical result.

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An experimental study on tournament design

Cited by 170 publications

References 27 publications

Winner-take-all and proportional-prize contests: Theory and experimental results

Winner-take-all and proportional-prize contests: Theory and experimental results

Relative rewards within team-based compensation

Tournaments and piece rates revisited: a theoretical and experimental study of output-dependent prize tournaments

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