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Designing Multiperson Tournaments with Asymmetric Contestants: An Experimental Study

  • 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)

Registered author(s):

    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.

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    File URL: http://dx.doi.org/10.1287/mnsc.1110.1325
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    Article provided by INFORMS in its journal Management Science.

    Volume (Year): 57 (2011)
    Issue (Month): 5 (May)
    Pages: 864-883

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    Handle: RePEc:inm:ormnsc:v:57:y:2011:i:5:p:864-883
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    10. Alannah Orrison & Andrew Schotter & Keith Weigelt, 2004. "Multiperson Tournaments: An Experimental Examination," Management Science, INFORMS, vol. 50(2), pages 268-279, February.
    11. Wilfred Amaldoss & Sanjay Jain, 2005. "Conspicuous Consumption and Sophisticated Thinking," Management Science, INFORMS, vol. 51(10), pages 1449-1466, October.
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    13. Ajay Kalra & Mengze Shi, 2001. "Designing Optimal Sales Contests: A Theoretical Perspective," Marketing Science, INFORMS, vol. 20(2), pages 170-193, December.
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