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Prize Structure and Information in Tournaments: Experimental Evidence

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  • Freeman, Richard B.
  • Gelber, Alexander M.

Abstract

This paper examines behavior in a tournament in which we vary the tournament prize structure and the information available about participants' skill at the task of solving mazes. The number of solved mazes is lowest when payments are independent of performance; higher when a single, large prize is given; and highest when multiple, differentiated prizes are given. This result is strongest when we inform participants about the number of mazes they and others solved in a pre-tournament round. Some participants reported that they solved more mazes than they actually solved, and this misreporting also peaked with multiple differentiated prizes.

Suggested Citation

  • Freeman, Richard B. & Gelber, Alexander M., 2008. "Prize Structure and Information in Tournaments: Experimental Evidence," MPRA Paper 12156, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:12156
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    File URL: https://mpra.ub.uni-muenchen.de/12156/1/MPRA_paper_12156.pdf
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    References listed on IDEAS

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    Cited by:

    1. Christiane Bradler & Robert Dur & Susanne Neckermann & Arjan Non, 2016. "Employee Recognition and Performance: A Field Experiment," Management Science, INFORMS, vol. 62(11), pages 3085-3099, November.
    2. Houser, Daniel & Vetter, Stefan & Winter, Joachim, 2012. "Fairness and cheating," European Economic Review, Elsevier, vol. 56(8), pages 1645-1655.
    3. 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.
    4. Cason, Timothy N. & Masters, William A. & Sheremeta, Roman M., 2010. "Entry into winner-take-all and proportional-prize contests: An experimental study," Journal of Public Economics, Elsevier, vol. 94(9-10), pages 604-611, October.
    5. Josse Delfgaauw & Robert Dur & Arjan Non & Willem Verbeke, 2015. "The Effects of Prize Spread and Noise in Elimination Tournaments: A Natural Field Experiment," Journal of Labor Economics, University of Chicago Press, vol. 33(3), pages 521-569.
    6. De Paola, Maria & Scoppa, Vincenzo, 2011. "Frequency of examinations and student achievement in a randomized experiment," Economics of Education Review, Elsevier, vol. 30(6), pages 1416-1429.
    7. Mago, Shakun D. & Sheremeta, Roman M. & Yates, Andrew, 2013. "Best-of-three contest experiments: Strategic versus psychological momentum," International Journal of Industrial Organization, Elsevier, vol. 31(3), pages 287-296.
    8. Iriberri, Nagore & Rey-Biel, Pedro, 2017. "Stereotypes are only a threat when beliefs are reinforced: On the sensitivity of gender differences in performance under competition to information provision," Journal of Economic Behavior & Organization, Elsevier, vol. 135(C), pages 99-111.
    9. Calsamiglia, Caterina & Franke, Jörg & Rey-Biel, Pedro, 2013. "The incentive effects of affirmative action in a real-effort tournament," Journal of Public Economics, Elsevier, vol. 98(C), pages 15-31.
    10. Richard Freeman, 2011. "New Roles for Unions and Collective Bargaining Post the Implosion of Wall Street Capitalism," Chapters,in: The Role of Collective Bargaining in the Global Economy, chapter 10 Edward Elgar Publishing.
    11. Werner Güth & René Levínský & Kerstin Pull & Ori Weisel, 2016. "Tournaments and piece rates revisited: a theoretical and experimental study of output-dependent prize tournaments," Review of Economic Design, Springer;Society for Economic Design, vol. 20(1), pages 69-88, March.
    12. Sheremeta, Roman M. & Wu, Steven Y., 2012. "Testing Canonical Tournament Theory: On the Impact of Risk, Social Preferences and Utility Structure," IZA Discussion Papers 6304, Institute for the Study of Labor (IZA).
    13. Migheli, Matteo, 2015. "Gender at work: Incentives and self-sorting," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 55(C), pages 10-18.
    14. Posadzy, Kinga & Josephson, Camilla & Martinsson, Peter, 2017. "How Does Dishonesty Affect Winning and the Willingness to Compete? Evidence from a Stiff Competition Environment," LiU Working Papers in Economics 5, Linköping University, Division of Economics, Department of Management and Engineering.
    15. Ashraf, Nava & Bandiera, Oriana & Lee, Scott S., 2014. "Awards unbundled: Evidence from a natural field experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 100(C), pages 44-63.
    16. Yang, Fanzheng, 2013. "Using laboratory experiments to study otherwise unobservable labor market interactions," ISU General Staff Papers 201301010800004100, Iowa State University, Department of Economics.
    17. Babington, Michael & Goerg, Sebastian J. & Kitchens, Carl, 2017. "Do Tournaments with Superstars Encourage or Discourage Competition?," IZA Discussion Papers 10755, Institute for the Study of Labor (IZA).
    18. Shinya Kajitani & Keiichi Morimoto & Shiba Suzuki, 2017. "Relative Performance Information Feedback and Just-Pass Behavior: Evidence from a Field Experiment," Working Papers 36, Meisei University, School of Economics.
    19. Yusuke Kinari & Noriko Mizutani & Fumio Ohtake & Hiroko Okudaira, 2011. "Overconfidence Increases Productivity," ISER Discussion Paper 0814, Institute of Social and Economic Research, Osaka University.
    20. Hammond, Robert G. & Zheng, Xiaoyong, 2013. "Heterogeneity in tournaments with incomplete information: An experimental analysis," International Journal of Industrial Organization, Elsevier, vol. 31(3), pages 248-260.
    21. Ivo Schedlinsky & Friedrich Sommer & Arnt Wöhrmann, 2016. "Risk-taking in tournaments: an experimental analysis," Journal of Business Economics, Springer, vol. 86(8), pages 837-866, November.
    22. Philip Mellizo & Jeffrey Carpenter & Peter Hans Matthews, 2014. "Workplace democracy in the lab," Industrial Relations Journal, Wiley Blackwell, vol. 45(4), pages 313-328, July.
    23. repec:cep:stieop:46 is not listed on IDEAS
    24. Bandiera, Oriana & Barankay, Iwan & Rasul, Imran, 2013. "Team incentives: evidence from a firm level," LSE Research Online Documents on Economics 53141, London School of Economics and Political Science, LSE Library.

    More about this item

    Keywords

    Tournaments; Wage Structure;

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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