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Designing Multiperson Tournaments with Asymmetric Contestants: An Experimental Study

Author

Listed:
  • Hua Chen

    () (Bauer College of Business, University of Houston, Houston, Texas 77204)

  • Sung H. Ham

    () (College of Business Administration, Kent State University, Kent, Ohio 44242)

  • Noah Lim

    () (Wisconsin School of Business, University of Wisconsin-Madison, Madison, Wisconsin 53706)

Abstract

Is the right amount of effort exerted in multiperson tournaments where contestants have two different levels of initial endowments (termed "favorites" and "underdogs")? We develop theoretical predictions for the level of effort and the effect of varying the prize structure. We test these predictions for three-person tournaments using an economic experiment in a social environment where contest outcomes are publicly announced. We find that both favorites and underdogs overexert effort relative to the theoretical point predictions. Moreover, in the treatment with two favorites and one underdog, favorites increase their effort when the number of prizes is increased from one to two, contrary to the theory prediction. We show that a generalized model that allows for psychological losses from losing for favorites and psychological gains from winning for underdogs because of social comparisons tracks the experimental results better than the standard theoretical model. This paper was accepted by Peter Wakker, decision analysis.

Suggested Citation

  • Hua Chen & Sung H. Ham & Noah Lim, 2011. "Designing Multiperson Tournaments with Asymmetric Contestants: An Experimental Study," Management Science, INFORMS, vol. 57(5), pages 864-883, May.
  • Handle: RePEc:inm:ormnsc:v:57:y:2011:i:5:p:864-883
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    File URL: http://dx.doi.org/10.1287/mnsc.1110.1325
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    References listed on IDEAS

    as
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    Cited by:

    1. Changxia Ke & Kai A. Konrad & Florian Morath, 2015. "Alliances In The Shadow Of Conflict," Economic Inquiry, Western Economic Association International, vol. 53(2), pages 854-871, April.
    2. 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.
    3. Tanja H�rtnagl & Rudolf Kerschbamer & Rudi Stracke & Uwe Sunde, 2013. "Heterogeneity in Rent-Seeking Contests with Multiple Stages: Theory and Experimental Evidence," Working Papers 2013-29, Faculty of Economics and Statistics, University of Innsbruck.
    4. Curtis R. Price & Roman M. Sheremeta, 2015. "Endowment Origin, Demographic Effects, and Individual Preferences in Contests," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 24(3), pages 597-619, September.
    5. Fehr, Dietmar & Schmid, Julia, 2014. "Exclusion in the all-pay auction: An experimental investigation," Discussion Papers, Research Unit: Market Behavior SP II 2014-206, Social Science Research Center Berlin (WZB).
    6. David Kelsey & Tigran Melkonyan, 2014. "Contests with Ambiguity," Discussion Papers 1411, Exeter University, Department of Economics.
    7. Magnus Hoffmann & Martin Kolmar, 2013. "Distributional Preferences in Probabilistic and Share Contests," CESifo Working Paper Series 4184, CESifo Group Munich.
    8. Shupp, Robert & Sheremeta, Roman M. & Schmidt, David & Walker, James, 2013. "Resource allocation contests: Experimental evidence," Journal of Economic Psychology, Elsevier, vol. 39(C), pages 257-267.
    9. Srinath Gopalakrishna & Jason Garrett & Murali K. Mantrala & Shrihari Sridhar, 2016. "Assessing sales contest effectiveness: the role of salesperson and sales district characteristics," Marketing Letters, Springer, vol. 27(3), pages 589-602, September.

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