Incentives in Tournaments with Endogenous Prize Selection

Harbring, Christine; Irlenbusch, Bernd

doi:10.1628/093245605775075951

Cited by 77 publications

(56 citation statements)

References 26 publications

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“…Harbring and Irlenbusch and their co-authors (2005 have provided a large share of the findings in this area. Several studies show that sabotage activities increase as the spread between winner and loser prizes widens (Harbring and Irlenbusch, 2005;Falk et al, 2008;Harbring and Irlenbusch, 2011). These studies focus on the role of the contest designer (the principal) in mitigating the incidence of sabotage through the judicious choice of incentive contracts.…”

Section: Extensions 61 Sabotage In Contestsmentioning

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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Section: Extensions 61 Sabotage In Contestsmentioning

confidence: 99%

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

2012

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“…Of course, sabotage is inherently difficult to study in the field, because workers may go to considerable lengths to conceal their acts of sabotage. This consideration has led a number of authors to study sabotage in the laboratory.The first published laboratory experiment on sabotage appears to be Harbring and Irlenbusch (2005) who investigate sabotage in both a baseline treatment where the prizes are exogenously manipulated by the experimenter, and in a setting where principals in the experiment can choose the prize structure. Four agents compete against each other with the top two receiving a 'winner' prize.…”

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confidence: 99%

Lab Labor: What Can Labor Economists Learn from the Lab?

Charness

Kühn

2011

Handbook of Labor Economics

204

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Lab Labor: What Can Labor Economists Learn from the Lab? *This paper surveys the contributions of laboratory experiments to labor economics. We begin with a discussion of methodological issues: why (and when) is a lab experiment the best approach; how do laboratory experiments compare to field experiments; and what are the main design issues? We then summarize the substantive contributions of laboratory experiments to our understanding of principal-agent interactions, social preferences, unionfirm bargaining, arbitration, gender differentials, discrimination, job search, and labor markets more generally. JEL Classification:C9, J0Keywords: labor economics, laboratory experiments, principal-agent theory, personnel economicsCorresponding author:Peter Kuhn Department of Economics University of California Santa Barbara, CA 93106 USA E-mail: pjkuhn@econ.ucsb.edu * Manuscript prepared for Handbook of Labor Economics, volume 4, Orley Ashenfelter and David Card, editors. We thank Michael Kuhn and Loni Spilberg for excellent research assistance. We have done our utmost to identify as many lab experimental papers in labor economics as possible, and to represent the results of these papers accurately. Given the volume of recent research in this area and the deadline we have faced in writing this review, it is inevitable that we have missed some important work. We also sincerely hope that we have not mischaracterized any paper's conclusions. The authors apologize for these limitations in advance and nevertheless hope that our review provides a helpful guide to the 'lab labor' literature to date.The economics literature has witnessed an explosion of laboratory experiments in the past 20 years. Many of these experiments have focused on topics that are central to the field of labor economics, including how workers respond to various forms of compensation, and the economics of discrimination, arbitration, bargaining, and matching. In this chapter we survey the contributions of laboratory experiments to our understanding of these questions.We begin our review with a discussion of methodological issues: First, we pose the general question of why (and more importantly when) a labor economist might want to conduct a laboratory experiment: What types of questions, if any, are laboratory experiments best suited to answer? How do laboratory experiments compare to field experiments? Next, once one has decided to conduct a laboratory experiment, how should it be designed? Here we review the main methodological decisions an experimenter typically needs to make, and the advantages and disadvantages of the various choices.The second half of our review turns its attention to the substantive issues in labor economics that have been addressed using laboratory experiments. While these are wideranging, we focus our review on the set of issues that have generated probably the largest volume of experimental papers in labor economics: the effects of compensation policies on the supply of effort by workers. We do this in two parts. The firs...

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“…One type of institution that has been proposed to alleviate free-riding involves experimenter-imposed sanctions and rewards (e.g., Dickinson and Isaac, 1998;Falkinger et al, 2000;Dickinson, 2001;Orrison et al, 2004;Harbring and Irlenbusch, 2005;Croson et al, 2006). Some designs from this line of research are somewhat close to ours as they involve an element of competition.…”

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confidence: 99%

“…However, the competition is not their main focus and therefore these papers cannot provide a direct answer whether it is capable of increasing contributions on its own: Dickinson (2001) investigates an institution in which all members of the group but the most cooperative one have to incur a fixed fine and the most cooperative member receives a reward in form of a fixed bonus payment. Orrison et al (2004) and Harbring and Irlenbusch (2005) use a tournament incentive structure involving rewards for winners and sanctions for losers. These studies find that the additional incentives provide a large initial boost to cooperation, which diminishes over time.…”

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confidence: 99%

Does Competition Resolve the Free-Rider Problem in the Voluntary Provision of Impure Public Goods? Experimental Evidence

Angelovski¹,

Neugebauer

Servátka³

2010

SSRN Journal

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Abstract:In this paper we assume that a public project creates different payoffs to different contributors. Within this environment we study two institutions: Rank Order Voluntary Contribution Mechanism (Rank-Order-VCM) and Random Order Voluntary Contribution Mechanism (Random-Order-VCM). In Rank-Order-VCM individuals compete with their observable contributions towards a public project for a larger share of the payoff that the project generates while in Random-Order-VCM the shares are assigned randomly. We observe that competition outweighs incentives to free-ride and find that Random-Rank-VCM elicits median contributions equal to the full endowment throughout the whole experiment, including the last period. In Random-Rank-VCM the contributions are significantly lower and decline over time.

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Incentives in Tournaments with Endogenous Prize Selection

Cited by 77 publications

References 26 publications

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

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

Lab Labor: What Can Labor Economists Learn from the Lab?

Does Competition Resolve the Free-Rider Problem in the Voluntary Provision of Impure Public Goods? Experimental Evidence

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