Incentive effects and overcrowding in tournaments: An experimental analysis

Vandegrift, Donald; Yavaş, Abdullah; Brown, Paul

doi:10.1007/s10683-006-9138-9

Cited by 38 publications

(28 citation statements)

References 38 publications

(42 reference statements)

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“…This failure to find an effect across the team-production and piece-rate conditions occurs despite a series of studies that have found strong effects from other incentive schemes (e.g. tournaments) using the MCPL task employed here (Brown, 1995(Brown, , 1998Vandegrift and Brown, 2003;Vandegrift et al, 2007;Vandegrift and Yavas, 2009). However, the differences in the performance of men and women across the two conditions are striking.…”

Section: Methodsmentioning

confidence: 84%

An experimental test of behavior under team production

Vandegrift

Yavaş

2010

Manage. Decis. Econ.

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This study reports experiments that examine behavior under team production and a piece rate. In the experiments, participants complete a forecasting task and are rewarded based on the accuracy of their forecasts. In the piece-rate condition, participants are paid based on their own performance, whereas the team-production condition rewards participants based on the average performance of the team. Overall, there is no statistically significant difference in performance between the conditions. However, this result masks important differences in the behavior of men and women across the conditions. Men in the team-production condition increase their performance relative to men in the piece-rate condition. However, this gap in male performances across conditions diminishes over the course of the experiment. In contrast, women in the team-production condition show significantly lower performance than the women in the piece rate. As a consequence of these differences, men in the team-production condition show significantly better performance than women in the team-production condition. We also find evidence that men show stronger performance when they are in teams with a larger variation in skill level. Copyright r 2010 John Wiley & Sons, Ltd. INTRODUCTIONUnder team production, groups rather than individuals are responsible for a set of tasks and compensation is based on the performance of the group. Because compensation is based on group performance, theoretical models of team production suggest that team members will free ride on the efforts of others (i.e. shirk). If total returns are divided evenly among a team with n members, team members incur the full cost of their effort while they receive only 1/n of the marginal gains from the effort. Consequently, effort levels are sub-optimal. Although theoretical models suggest that team production may lower worker productivity, firms often opt to reward workers based on team performance anyway. For instance, a recent survey finds that 26% of firms used team rewards (McClurg, 2001).To further advance understanding of behavior under team production, we conduct a series of experiments. We compare behavior under team production and a piece-rate payment scheme and examine the likely causes of the mixed results on shirking in team production. In the experiments, participants complete a real-effort forecasting task and are rewarded based on the accuracy of their forecasts. The experimental task is designed to allow measurement of both individual contributions and team performance.1 Participants were randomly assigned to one of two conditions. In the piece-rate condition, participants are paid based on their own performance, whereas the team-production condition rewards participants based on the average performance of the team. In each condition, participants produce forecasts for twenty rounds. In each round, participants receive feedback on their forecast error and earnings. In the team-production condition, participants also receive information on the forecast error of the tea...

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Section: Methodsmentioning

confidence: 84%

An experimental test of behavior under team production

Vandegrift

Yavaş

2010

Manage. Decis. Econ.

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“…Vandegrift et al (2007), for example, report a real-effort experiment in which subjects choose between a piece-rate, a single-prize and multiple-prize lottery contests. They find that, holding total payments constant across contests, effort is higher in the single-prize contest than in a multiprize contest.…”

Section: Endogenous Entrymentioning

confidence: 99%

A Survey of Experimental Research on Contests, All-Pay Auctions and Tournaments

2012

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Many economic, political and social environments can be described as contests in which agents exert costly efforts while competing over the distribution of a scarce resource. These environments have been studied using Tullock contests, all-pay auctions and rank-order tournaments. This survey provides a comprehensive review of experimental research on these three canonical contests. First, we review studies investigating the basic structure of contests, including the number of players and prizes, spillovers and externalities, heterogeneity, risk and incomplete information. Second, we discuss dynamic contests and multi-battle contests. Then we review studies examining sabotage, feedback, bias, collusion, alliances, group contests and gender, as well as field experiments. Finally, we discuss applications of contests and suggest directions for future research. IntroductionMany economic, political and social environments can be described as contests in which competing agents have the opportunity to expend scarce resources -such as effort, money, time, or troops -in order to affect the probabilities of winning prizes. Examples range from the competition for mates, college admission, patents, or promotions within firms, to the process of litigation or lobbying politicians, to elections, sports competitions, and violent global conflicts (Tullock, 1967;Krueger, 1974). As is obvious from this list, these environments have attracted considerable attention in applications in a wide range of fields, both in-and out-side of economics. They have also been studied extensively by economic theorists in what has become known as the field of contest theory (Konrad, 2009). Although this field continues to attract many young theorists, it has its roots in three models developed in the mid-seventies to early eighties: the Tullock (1980) model of rent-seeking, the Lazear and Rosen (1981) rank-order tournament model, and the all-pay auction (Hirshleifer and Riley, 1978;Nalebuff and Stiglitz, 1983;Dasgupta, 1986;Hillman and Riley, 1989). Despite the fact that the three models historically developed somewhat independently, they represent special cases of a general contest model that can be formulated in a unified framework.Despite an extensive and established theoretical literature, much less effort has been devoted to empirically investigate individual behavior in different contests and compare such behavior with theoretical predictions. The main reason is that it is not trivial to measure individual effort in the field since the researcher can only observe the performance of contestants, which is a function of effort, ability and luck (Ericsson and Charness, 1994). The majority of empirical studies use either firm level data (Prendergast, 1999) or sports data (Szymanski, 2003). Because it is typically difficult to measure the actual effort expended by players in the field, almost all of these studies focus solely on investigating whether the pattern of outcomes is consistent with the theoretical predictions.Controlled experimen...

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“…As such, my experiment is designed to maximise the effort of all the participants. Vandergrift et al (2007) design an experiment where they compare the subjects under three treatments: a) a graduated tournament, b) a winner-take-all tournament, and c) a piece-rate payment. Their results show that the effect of the incentive is maximum under (b), but that the entrants in the tournament select so that the best prefer (a) to (b).…”

Section: Experimental Design and Proceduresmentioning

confidence: 99%

Gender at work: Incentives and self-sorting

Migheli

2015

Journal of Behavioral and Experimental Economics

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This paper analyses the relationship between workers' gender and monetary incentives in an experimental setting based on a double-tournament scheme. The participants must choose between a piece-rate payment or a performance prize. The results show that women fail to reveal their type, and are less sensitive than men to the monetary incentives of the tournament. In addition, the tournament scheme induces males, but not females, to signal their ability and to select the contract which is more profitable for them.

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Incentive effects and overcrowding in tournaments: An experimental analysis

Cited by 38 publications

References 38 publications

An experimental test of behavior under team production

An experimental test of behavior under team production

A Survey of Experimental Research on Contests, All-Pay Auctions and Tournaments

Gender at work: Incentives and self-sorting

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