The Effects of Prize Spread and Noise in Elimination Tournaments: A Natural Field Experiment

Josse Delfgaauw, Robert Dur, Arjan Non and Willem Verbeke
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Willem Verbeke: Erasmus University Rotterdam, ERIM

No 11-120/1, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: This discussion paper led to a publication in the Journal of Labor Economics .

We conduct a field experiment in a large retail chain to test basic predictions of tournament theory regarding prize spread and noise. A random subset of the 208 stores participates in two-stage elimination tournaments. Tournaments differ in the distribution of prize money across winners of the first and second round of the tournament. As predicted by theory, we find that a more convex prize spread increases performance in the second round at the expense of first-round performance, although the magnitude of these effects is small. Moreover, the treatment effect is significantly larger for stores that historically have relatively stable performance as compared to stores with more noisy performance.

Keywords: Elimination tournaments; Incentives; Prize spread; Performance measurement; Field experiment (search for similar items in EconPapers)
JEL-codes: C93 M51 M52 (search for similar items in EconPapers)
Date: 2011-08-11, Revised 2013-10-03
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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https://papers.tinbergen.nl/11120.pdf (application/pdf)

Related works:
Journal Article: The Effects of Prize Spread and Noise in Elimination Tournaments: A Natural Field Experiment (2015)
Working Paper: The Effects of Prize Spread and Noise in Elimination Tournaments: A Natural Field Experiment (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20110120

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