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Adding Tournament to Tournament: Combining Between-Team and Within-Team Incentives

Author

Listed:
  • Michael Majerczyk

    (J. Mack Robinson College of Business, Georgia State University)

  • Roman Sheremeta

    (Weatherhead School of Management, Case Western Reserve University and Economic Science Institute, Chapman University)

  • Yu Tian

    (Kenneth G. Dixon School of Accounting, University of Central Florida)

Abstract

We examine theoretically and experimentally how combining between-team and within-team incentives affects behavior in team tournaments. Theory predicts that free-riding will occur when there are only between-team incentives, and offering within-team incentives may solve this problem. However, if individuals collude, then within-team incentives may not be as effective at reducing free-riding. Consistent with the theoretical predictions, the results of our experiment indicate that although between-team incentives are effective at increasing individual effort, there is substantial free-riding and declining effort over time. Importantly, a combination of between-team and within-team incentives is effective not only at generating effort but also at sustaining effort over time, mitigating free-riding problem, increasing cooperation and decreasing collusion within teams.

Suggested Citation

  • Michael Majerczyk & Roman Sheremeta & Yu Tian, 2019. "Adding Tournament to Tournament: Combining Between-Team and Within-Team Incentives," Working Papers 19-20, Chapman University, Economic Science Institute.
    • Handle: RePEc:chu:wpaper:19-20
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    File URL: https://digitalcommons.chapman.edu/esi_working_papers/279/
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    Cited by:

    1. Danilov, Anastasia & Harbring, Christine & Irlenbusch, Bernd, 2019. "Helping under a combination of team and tournament incentives," Journal of Economic Behavior & Organization, Elsevier, vol. 162(C), pages 120-135.
    2. Lackner, Mario & Stracke, Rudi & Sunde, Uwe & Winter-Ebmer, Rudolf, 2020. "Are competitors forward looking in strategic interactions? Field evidence from multistage tournaments," Journal of Economic Behavior & Organization, Elsevier, vol. 179(C), pages 544-565.
    3. Christoph March & Marco Sahm, 2021. "Parochial altruism and the absence of the group size paradox in inter-group conflicts," Economics Bulletin, AccessEcon, vol. 41(2), pages 361-373.
    4. Christoph March & Marco Sahm, 2025. "The perks of being in the smaller team: incentives in overlapping contests," Review of Economic Design, Springer;Society for Economic Design, vol. 29(3), pages 585-610, September.

    More about this item

    Keywords

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    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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