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Tournament Incentives and Contestant Heterogeneity: Empirical Evidence from the Organizational Practice

  • Uschi Backes-Gellner

    ()

    (Institute for Strategy and Business Economics, University of Zurich)

  • Kerstin Pull

    (Eberhard Karls Universitaet Tuebingen)

Whereas the theoretical literature on organizational reward systems repeatedly points to the importance of tournament models from an efficiency perspective, very few is known about the application and effectiveness of tournament compensation in organizations, especially when contestant heterogeneity is taken into account. While the distorting effects of contestant heterogeneity on tournament incentives have been theoretically analyzed for the two-contestant-case, tournament incentives in a typical organizational context with more than two contestants and with more than one prize, have not been studied so far. In our paper, we analyze these effects theoretically as well as empirically by studying incentive travel sales contests as a quantitatively important component of compensation, and we also present first empirical evidence on (successful and unsuccessful) organizational attempts to reduce contestant heterogeneity by active handicapping and league-building.

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Paper provided by University of Zurich, Institute for Strategy and Business Economics (ISU) in its series Working Papers with number 0075.

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Length: 27 pages
Date of creation: Feb 2007
Date of revision:
Handle: RePEc:iso:wpaper:0075
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  1. Lynch, James G., 2005. "The effort effects of prizes in the second half of tournaments," Journal of Economic Behavior & Organization, Elsevier, vol. 57(1), pages 115-129, May.
  2. Abrevaya, Jason, 2002. "Ladder tournaments and underdogs: lessons from professional bowling," Journal of Economic Behavior & Organization, Elsevier, vol. 47(1), pages 87-101, January.
  3. Harbring, Christine & Irlenbusch, Bernd, 2005. "How Many Winners Are Good to Have? On Tournaments with Sabotage," IZA Discussion Papers 1777, Institute for the Study of Labor (IZA).
  4. repec:cup:cbooks:9780521589819 is not listed on IDEAS
  5. repec:cup:cbooks:9780521589833 is not listed on IDEAS
  6. Harbring, Christine & Irlenbusch, Bernd, 2008. "How many winners are good to have?: On tournaments with sabotage," Journal of Economic Behavior & Organization, Elsevier, vol. 65(3-4), pages 682-702, March.
  7. repec:cup:cbooks:9780521589826 is not listed on IDEAS
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