Testing Canonical Tournament Theory: On the Impact of Risk, Social Preferences and Utility Structure
AbstractWe use experiments to test comparative statics predictions of canonical tournament theory. Both the roles of principal and agent are populated by human subjects, allowing us to test predictions for both incentive responses and optimal tournament design. Consistent with theory, we observed an incentive effect from raising the winner's prize. However, we also observed several empirical puzzles that appeared to contradict theory. Controlling for social preferences did not resolve the puzzles, although social preferences do influence behavior. It turns out that the puzzles can be explained by the canonical model once the textbook assumption of separable agent utility is relaxed.
Download InfoIf 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.
Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6304.
Length: 66 pages
Date of creation: Jan 2012
Date of revision:
Contact details of provider:
Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org
Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Find related papers by JEL classification:
- D03 - Microeconomics - - General - - - Behavioral Microeconomics; Underlying Principles
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
- M52 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
- M55 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - Labor Contracting Devices
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-02-20 (All new papers)
- NEP-CBE-2012-02-20 (Cognitive & Behavioural Economics)
- NEP-EXP-2012-02-20 (Experimental Economics)
- NEP-HRM-2012-02-20 (Human Capital & Human Resource Management)
- NEP-UPT-2012-02-20 (Utility Models & Prospect Theory)
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.:
- Cason, Timothy & Masters, William & Sheremeta, Roman, 2010.
"Entry into Winner-Take-All and Proportional-Prize Contests: An Experimental Study,"
49886, University Library of Munich, Germany.
- Cason, Timothy N. & Masters, William A. & Sheremeta, Roman M., 2010. "Entry into winner-take-all and proportional-prize contests: An experimental study," Journal of Public Economics, Elsevier, vol. 94(9-10), pages 604-611, October.
- Timothy N. Cason & William A. Masters & Roman M. Sheremeta, 2010. "Entry Into Winner-Take-All And Proportional-Prize Contests:An Experimental Study," Purdue University Economics Working Papers 1231, Purdue University, Department of Economics.
- Timothy N. Cason & William A. Masters & Roman M. Sheremeta, 2010. "Entry into Winner-Take-All and Proportional-Prize Contests: An Experimental Study," Working Papers 10-10, Chapman University, Economic Science Institute.
- Christian Grund & Dirk Sliwka, 2005.
"Envy and Compassion in Tournaments,"
Journal of Economics & Management Strategy,
Wiley Blackwell, vol. 14(1), pages 187-207, 03.
- Petra Nieken, 2010. "On the Choice of Risk and Effort in Tournaments-Experimental Evidence," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 19(3), pages 811-840, 09.
- Steven Wu & Brian Roe, 2005. "Behavioral and Welfare Effects of Tournaments and Fixed Performance Contracts: Some Experimental Evidence," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(1), pages 130-146.
- Richard B. Freeman & Alexander M. Gelber, 2010.
"Prize Structure and Information in Tournaments: Experimental Evidence,"
American Economic Journal: Applied Economics,
American Economic Association, vol. 2(1), pages 149-64, January.
- Freeman, Richard B. & Gelber, Alexander M., 2008. "Prize Structure and Information in Tournaments: Experimental Evidence," MPRA Paper 12156, University Library of Munich, Germany.
- Paul J. Healy, 2007.
"Group Reputations, Stereotypes, and Cooperation in a Repeated Labor Market,"
American Economic Review,
American Economic Association, vol. 97(5), pages 1751-1773, December.
- Paul Healy, . "Group Reputations, Stereotypes, and Cooperation in a Repeated Labor Market," GSIA Working Papers 2006-E6, Carnegie Mellon University, Tepper School of Business.
- Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
- Patrick Bolton & Mathias Dewatripont, 2005.
MIT Press Books,
The MIT Press,
edition 1, volume 1, number 0262025760, December.
- Magnus Hoffmann & Martin Kolmar, 2013. "Distributional Preferences in Probabilistic and Share Contests," CESifo Working Paper Series 4184, CESifo Group Munich.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak).
If references are entirely missing, you can add them using this form.