On the Competition of Asymmetric Agents

Christine Harbring and Gabriele K. Lünser

German Economic Review, 2008, vol. 9, issue 3, 373-395

Abstract: Abstract. Rank‐order tournaments are usually implemented in organizations to provide incentives for eliciting employees' effort and/or to identify the agent with the higher ability, for example in promotion tournaments. We close a gap in the literature by experimentally analyzing a ceteris paribus variation of the prize spread – being the major design feature of tournaments – in a symmetric and an asymmetric setting. We find that effort significantly increases with the prize spread as predicted by standard theory. However, only for sufficiently large prize spreads weak players competing against strong players strain themselves all the more and sorting of agents is feasible.

Date: 2008
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German Economic Review is currently edited by Bernhard Felderer, Joseph F. Francois, Ivo Welch, Urs Schweizer and David E. Wildasin

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