Tournaments for the endogenous allocating of prizes within workteams - Theory and experimental evidence

Matthias Sutter ()

Papers on Strategic Interaction from Max Planck Institute of Economics, Strategic Interaction Group

Abstract: We present a model where compensation within a workteam is determined endogenously by the use of a rank-order tournament. Team members compete in their efforts for the right to propose the distribution of a prize within the team. The implementation of a proposal requires the approval of other team members. Failure to reach an agreement is costly and the role of proposer rotates in the order of members' efforts. We show in an experiment that tournaments elicit higher efforts than random determination of the proposer role. Proposers get a significantly larger share of the prize than non-proposers.

Keywords: Tournament; work incentives; teams; allocation of prizes; experiment (search for similar items in EconPapers)
JEL-codes: C72 C91 C92 J33 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev and nep-exp
Date: 2004-02
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