Homogenous and Heterogenous Contestants in Piece Rate Tournaments: Theory and Empirical Analysis

Tomislav Vukina and Xiaoyong Zheng ()

Journal of Business & Economic Statistics, 2011, vol. 29, issue 4, 506-517

Abstract: In this article we show that sorting different ability contestants in piece rate tournaments into more homogenous groups alters agents' incentives to exert effort. We propose a method for structurally estimating the piece rate tournament game with heterogenous players and apply it to the payroll data from a broiler production contract. Our counterfactual analysis shows that under reasonable assumptions, both the principal and the growers can gain when the tournament groups are heterogenized. This business strategy could be difficult to implement in real-life settings, however. This article has supplementary material online.

Date: 2011
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Related works:
Journal Article: Homogenous and Heterogenous Contestants in Piece Rate Tournaments: Theory and Empirical Analysis (2011)
Working Paper: Homogenous and Heterogenous Contestants in Piece Rate Tournaments: Theory and Empirical Analysis (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:taf:jnlbes:v:29:y:2011:i:4:p:506-517

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DOI: 10.1198/jbes.2010.08345

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