The effects of bigger rewards in individual tournaments on efforts and risk taking: evidence from chess

Rasyad Parinduri, Hon Lee and Kung Ming Tiong

Oxford Economic Papers, 2019, vol. 71, issue 4, 979-995

Abstract: We examine the effects of bigger rewards in individual dynamic tournaments on efforts and risk taking using the three-point rule in chess. Most chess tournaments use the standard rule while some tournaments use the Bilbao rule, which is identical to the three-point rule in soccer: We observe the same pairs of chess players playing under both rules, a research design that fits fixed-effect models. We find the Bilbao rule makes games 33% more decisive, mostly to white players’ advantage, who win 50% more games. We identify two mechanisms why the Bilbao rule works: It encourages players to play longer and discourages them from using drawish openings. These results suggest incentive schemes that provide bigger rewards for better performances work in individual multi-stage tournaments in which efforts and financial rewards are directly linked, and in which strategic interactions among teammates and with competitors are less complex.

JEL-codes: J22 J33 J41 M52 (search for similar items in EconPapers)
Date: 2019
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Working Paper: The effects of the three-point rule in individual sports: Evidence from chess (2016)
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