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

Josse Delfgaauw, Robert Dur, Arjan Non and Willem Verbeke ()
Additional contact information
Willem Verbeke: Erasmus University Rotterdam

No 6480, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We conduct a natural 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: field experiment; incentives; prize spread; elimination tournaments; performance measurement (search for similar items in EconPapers)
JEL-codes: C93 M51 M52 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2012-04
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-hrm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published - revised version published in: Journal of Labor Economics, 2015, 33(3), 521-569

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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 (2013)
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