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Horizontal and Vertical Social Preferences in Tournaments

Author

Listed:
  • Gerald Eisenkopf
  • Sabrina Teyssier

Abstract

Most studies find no collusion in tournaments. This result suggests that social preferences are irrelevant in this context. We investigate the impact of social preferences in a tournament using data from a laboratory experiment with two treatments. In a conentional tournament, an agent receives either the full prize or no prize at all. The other tournament provides the same incentives but the actual payment of an agent equals her expected payment. In both treatments the principal chooses between a fair and an unfair contract. Standard economic theory predicts the same effort provision in all situations. Our results show instead that envy between agents and the fairness of the principal determine the effectiveness of tournaments. Moreover, we observe that collusion between the agents and reciprocity towards the principal are mutually exclusive.

Suggested Citation

  • Gerald Eisenkopf & Sabrina Teyssier, 2009. "Horizontal and Vertical Social Preferences in Tournaments," TWI Research Paper Series 48, Thurgauer Wirtschaftsinstitut, Universität Konstanz.
    • Handle: RePEc:twi:respas:0048
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    Citations

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    Cited by:

    1. Emmanuel Dechenaux & Dan Kovenock & Roman Sheremeta, 2015. "A survey of experimental research on contests, all-pay auctions and tournaments," Experimental Economics, Springer;Economic Science Association, vol. 18(4), pages 609-669, December.
    2. Hoffmann, Magnus & Kolmar, Martin, 2017. "Distributional preferences in probabilistic and share contests," Journal of Economic Behavior & Organization, Elsevier, vol. 142(C), pages 120-139.
    3. Eisenkopf, Gerald & Teyssier, Sabrina, 2013. "Envy and loss aversion in tournaments," Journal of Economic Psychology, Elsevier, vol. 34(C), pages 240-255.
    4. Cason, Timothy N. & Masters, William A. & Sheremeta, Roman M., 2020. "Winner-take-all and proportional-prize contests: Theory and experimental results," Journal of Economic Behavior & Organization, Elsevier, vol. 175(C), pages 314-327.

    More about this item

    Keywords

    Tournament; Collusion; Envy; Agency problem; Reciprocity;
    All these keywords.

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