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Self-selection and the Efficiency of Tournaments

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Author Info

  • Tor Eriksson

    ()
    (Department of economics - University of Aarhus)

  • Sabrina Teyssier

    ()
    (Thurgau Institute of Economics - Universität Konstanz)

  • Marie Claire Villeval

    ()
    (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure (ENS) - Lyon - PRES Université de Lyon - Université Jean Monnet - Saint-Etienne - Université Claude Bernard - Lyon I)

Abstract

The literature has shown that the overall efficiency of exogenously imposed tournaments is reduced by a high variance in performance. This paper reports results from an experiment analyzing whether allowing subjects to self-select into different payment schemes is reducing the variability of performance in tournaments. We show that when the subjects choose to enter a tournament instead of a piece-rate payment scheme, the average effort is higher and the between-subject variance is substantially lower than when the same payment scheme is imposed. Mainly based on risk aversion, sorting is efficiency-enhancing since it increases the homogeneity of the contestants.

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File URL: http://halshs.archives-ouvertes.fr/docs/00/45/16/00/PDF/EconInquiry_Sel_selection.pdf
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Bibliographic Info

Paper provided by HAL in its series Post-Print with number halshs-00451600.

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Date of creation: 2009
Date of revision:
Publication status: Published, Economic Inquiry, 2009, 47, 3, pp. 530-548
Handle: RePEc:hal:journl:halshs-00451600

Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00451600
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Web page: http://hal.archives-ouvertes.fr/

Related research

Keywords: Tournament; Performance Pay ; Incentives ; Sorting ; Selection ; Experiment;

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  31. repec:wop:humbsf:2001-2 is not listed on IDEAS
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