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Tournaments with price-setting agents

Author

Listed:
  • Eriksen, Kristoffer

    (University of Stavanger)

  • Kvaløy, Ola

    () (University of Stavanger)

  • Olsen, Trond

    (Norwegian School of Economics and Business Administration)

Abstract

In many tournaments it is the contestants themselves who determine reward allocation. Labor-union members bargain over wage distribution, and many firms allow self-managed teams to freely determine internal resource allocation, incentive structure, and division of labour. We analyze, and test experimentally, a rank-order tournament where heterogenous agents determine the spread between winner prize and looser prize. We investigate the relationship between prize spread, uncertainty (i.e. noise between e¤ort and performance), heterogeneity and effort. The paper challenges well-known results from tournament theory. We find that a large prize spread is associated with low degree of uncertainty and high degree of heterogeneity, and that heterogeneity triggers effort. By and large, our real-effort experiment supports the theoretical predictions.
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Eriksen, Kristoffer & Kvaløy, Ola & Olsen, Trond, 2008. "Tournaments with price-setting agents," UiS Working Papers in Economics and Finance 2009/5, University of Stavanger.
  • Handle: RePEc:hhs:stavef:2009_005
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    File URL: http://www1.uis.no/ansatt/odegaard/uis_wps_econ_fin/uis_wps_2009_5_eriksen_kvaloy_olsen.pdf
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    References listed on IDEAS

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    Cited by:

    1. Eriksen, Kristoffer W. & Kvaløy, Ola, 2014. "Myopic risk-taking in tournaments," Journal of Economic Behavior & Organization, Elsevier, vol. 97(C), pages 37-46.
    2. Antonio Filippin & Paolo Crosetto, 2016. "A Reconsideration of Gender Differences in Risk Attitudes," Management Science, INFORMS, vol. 62(11), pages 3138-3160, November.
    3. Eriksen, Kristoffer W & Kvaløy, Ola, 2015. "2015/01 No guts, no glory: An experiment on excessive risk-taking by Kristoffer W. Eriksen and Ola Kvaløy," UiS Working Papers in Economics and Finance 2015/1, University of Stavanger.

    More about this item

    Keywords

    Tournaments;

    JEL classification:

    • A10 - General Economics and Teaching - - General Economics - - - General

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