Advanced Search
MyIDEAS: Login

The Effects of Prize Spread and Noise in Elimination Tournaments: A Natural Field Experiment

Contents:

Author Info

  • Josse Delfgaauw

    (Erasmus University Rotterdam)

  • Robert Dur

    (Erasmus University Rotterdam, CESifo, IZA)

  • Arjan Non

    (Erasmus University Rotterdam)

  • Willem Verbeke

    (Erasmus University Rotterdam, ERIM)

Abstract

We conduct a field experiment in a large retail chain to test basic predictions of tournament theory regarding prize spread and noise. A random subset of the 208 stores participates in two-stage elimination tournaments. Tournaments differ in the distribution of prize money across winners of the first and second round of the tournament. As predicted by theory, we find that a more convex prize spread increases performance in the second round at the expense of first-round performance, although the magnitude of these effects is small. Moreover, the treatment effect is significantly larger for stores that historically have relatively stable performance as compared to stores with more noisy performance.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://papers.tinbergen.nl/11120.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 11-120/1.

as in new window
Length:
Date of creation: 11 Aug 2011
Date of revision: 03 Oct 2013
Handle: RePEc:dgr:uvatin:20110120

Contact details of provider:
Web page: http://www.tinbergen.nl

Related research

Keywords: Elimination tournaments; Incentives; Prize spread; Performance measurement; Field experiment;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Kosfeld, Michael & Neckermann, Susanne, 2010. "Getting More Work for Nothing? Symbolic Awards and Worker Performance," IZA Discussion Papers 5040, Institute for the Study of Labor (IZA).
  2. Jed DeVaro, 2005. "Internal Promotion Competitions in Firms," Labor and Demography 0508005, EconWPA.
  3. Delfgaauw, Josse & Dur, Robert & Non, Arjan & Verbeke, Willem, 2014. "Dynamic incentive effects of relative performance pay: A field experiment," Labour Economics, Elsevier, vol. 28(C), pages 1-13.
  4. Green, Jerry & Stokey, Nancy, 1983. "A Comparison of Tournaments and Contracts," Scholarly Articles 3203644, Harvard University Department of Economics.
  5. Bognanno, Michael L, 2001. "Corporate Tournaments," Journal of Labor Economics, University of Chicago Press, vol. 19(2), pages 290-315, April.
  6. Lazear, Edward P, 1989. "Pay Equality and Industrial Politics," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 561-80, June.
  7. Sherwin Rosen, 1985. "Prizes and Incentives in Elimination Tournaments," NBER Working Papers 1668, National Bureau of Economic Research, Inc.
  8. Ehrenberg, Ronald G & Bognanno, Michael L, 1990. "Do Tournaments Have Incentive Effects?," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1307-24, December.
  9. Rick Audas & Tim Barmby & John Treble, 2004. "Luck, Effort, and Reward in an Organizational Hierarchy," Journal of Labor Economics, University of Chicago Press, vol. 22(2), pages 379-396, April.
  10. Bruno S. Frey & Susanne Neckermann, 2008. "Awards: A view from psychological economics," IEW - Working Papers 357, Institute for Empirical Research in Economics - University of Zurich.
  11. Edward P. Lazear, 1995. "Personnel Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121883, December.
  12. Gary Charness & Peter J. Kuhn, 2010. "Lab Labor: What Can Labor Economists Learn from the Lab?," NBER Working Papers 15913, National Bureau of Economic Research, Inc.
  13. Auriol, Emmanuelle & Renault, Régis, 2007. "Status and Incentives," IDEI Working Papers 451, Institut d'Économie Industrielle (IDEI), Toulouse.
  14. Delfgaauw, Josse & Dur, Robert & Sol, Joeri & Verbeke, Willem, 2009. "Tournament Incentives in the Field: Gender Differences in the Workplace," IZA Discussion Papers 4395, Institute for the Study of Labor (IZA).
  15. Edward P. Lazear & Sherwin Rosen, 1979. "Rank-Order Tournaments as Optimum Labor Contracts," NBER Working Papers 0401, National Bureau of Economic Research, Inc.
  16. Steffen Altmann & Armin Falk & Matthias Wibral, 2012. "Promotions and Incentives: The Case of Multistage Elimination Tournaments," Journal of Labor Economics, University of Chicago Press, vol. 30(1), pages 149 - 174.
  17. Bandiera, Oriana & Barankay, Iwan & Rasul, Imran, 2012. "Team Incentives: Evidence from a Firm Level Experiment," CEPR Discussion Papers 8776, C.E.P.R. Discussion Papers.
  18. Eriksson, Tor, 1999. "Executive Compensation and Tournament Theory: Empirical Tests on Danish Data," Journal of Labor Economics, University of Chicago Press, vol. 17(2), pages 262-80, April.
  19. Murphy, Kevin J., 1985. "Corporate performance and managerial remuneration : An empirical analysis," Journal of Accounting and Economics, Elsevier, vol. 7(1-3), pages 11-42, April.
  20. Qiang Fu & JingFeng Lu, 2007. "The Optimal Multi-Stage Contest," NajEcon Working Paper Reviews 843644000000000387, www.najecon.org.
  21. Moldovanu, Benny & Sela, Aner & Shi, Xianwen, 2005. "Contests for Status," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 139, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  22. Knoeber, Charles R & Thurman, Walter N, 1994. "Testing the Theory of Tournaments: An Empirical Analysis of Broiler Production," Journal of Labor Economics, University of Chicago Press, vol. 12(2), pages 155-79, April.
  23. Bull, Clive & Schotter, Andrew & Weigelt, Keith, 1987. "Tournaments and Piece Rates: An Experimental Study," Journal of Political Economy, University of Chicago Press, vol. 95(1), pages 1-33, February.
  24. Ghazala Azmat & Nagore Iriberri, 2010. "The Importance of Relative Performance Feedback Information: Evidence from a Natural Experiment using High School Students," Working Papers 444, Barcelona Graduate School of Economics.
  25. Glenn Harrison & John List, 2004. "Field experiments," Artefactual Field Experiments 00058, The Field Experiments Website.
  26. Freeman, Richard B. & Gelber, Alexander M., 2008. "Prize Structure and Information in Tournaments: Experimental Evidence," MPRA Paper 12156, University Library of Munich, Germany.
  27. O'Keeffe, Mary & Viscusi, W Kip & Zeckhauser, Richard J, 1984. "Economic Contests: Comparative Reward Schemes," Journal of Labor Economics, University of Chicago Press, vol. 2(1), pages 27-56, January.
  28. McCue, Kristin, 1996. "Promotions and Wage Growth," Journal of Labor Economics, University of Chicago Press, vol. 14(2), pages 175-209, April.
  29. repec:rje:randje:v:37:y:2006:3:p:521-542 is not listed on IDEAS
  30. Gibbs, Michael, 1995. "Incentive compensation in a corporate hierarchy," Journal of Accounting and Economics, Elsevier, vol. 19(2-3), pages 247-277, April.
  31. Waldman, Michael, 2007. "Theory and evidence in internal labor markets," MPRA Paper 5113, University Library of Munich, Germany.
  32. Jordi Blanes i Vidal & Mareike Nossol, 2011. "Tournaments Without Prizes: Evidence from Personnel Records," Management Science, INFORMS, vol. 57(10), pages 1721-1736, October.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Delfgaauw, Josse & Dur, Robert & Non, Arjan & Verbeke, Willem, 2013. "Dynamic Incentive Effects of Relative Performance Pay: A Field Experiment," IZA Discussion Papers 7652, Institute for the Study of Labor (IZA).
  2. Stracke, Rudi & Höchtl, Wolfgang & Kerschbamer, Rudolf & Sunde, Uwe, 2012. "Optimal Prizes in Dynamic Elimination Contests: An Experimental Analysis," Economics Working Paper Series 1208, University of St. Gallen, School of Economics and Political Science.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:dgr:uvatin:20110120. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Antoine Maartens (+31 626 - 160 892)).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.