Selection Efficiency in Multiple-Prize Tournaments with Sabotage

Huang Baoting, Hsueh Shao-Chieh () and Min Qiang (Kent) Zhao
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Huang Baoting: Business School, Liming Vocational University, Quanzhou, Fujian, China
Hsueh Shao-Chieh: 74616 Department of International Business, School of Economics and Management, Xiamen University of Technology , Xiamen, China

The B.E. Journal of Economic Analysis & Policy, 2025, vol. 25, issue 1, 1-36

Abstract: Sabotage in competitive environments, like sales contests and sports, can hinder the effectiveness of rank-order tournaments in selecting the most capable individuals. Traditional winner-take-all tournaments may unintentionally level the playing field, making it difficult to distinguish the best. Despite extensive research on tournament design, the impact of sabotage on selection efficiency remains underexplored. This paper addresses this gap by investigating how the introduction of multiple-prize structures in rank-order tournaments affects selection efficiency in the presence of sabotage. Our analysis reveals that multiple prizes can improve the selection of high-performing contestants by redirecting sabotage toward weaker opponents, resulting in corner equilibria. In contrast, winner-take-all structures often result in interior equilibria, where promotion chances are equalized. By outlining the conditions under which these equilibria arise, we demonstrate that strategic prize design can enhance performance incentives, mitigate the negative impact of sabotage, and ultimately improve the selection efficiency of rank-order tournaments.

Keywords: prize design; tournament; sabotage; selection efficiency; corner equilibria (search for similar items in EconPapers)
JEL-codes: C72 D23 D40 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1515/bejeap-2024-0172

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