Suspense

Pascal Courty, Hao Li and William Chan

No 3251, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: In a dynamic model of sports competition, we show that when spectators care only about the level of effort exerted by contestants, rewarding schemes that depend linearly on the final score difference provide more efficient incentives for efforts than schemes based only on who wins and loses. This result is puzzling because rank order schemes are the dominant forms of reward in sports competitions. The puzzle can be explained if one takes into account the fact that spectators also care about the suspense in the game. We define the spectators' demand for suspense as a greater utility derived from contestants' efforts when the game is closer. As the demand for suspense increases, so does the advantage of rank order schemes relative to linear score difference schemes. This relative advantage is realized by suitably increasing the winners prize in rank order schemes. When the demand for suspense is sufficiently high, the optimal rank order scheme dominates all linear score difference schemes, and in a limit case, it is optimal among all incentive schemes that reward contestants on the basis of the final score difference.

Keywords: Tournament; Sports economics; Incentives (search for similar items in EconPapers)
JEL-codes: D80 J33 L83 (search for similar items in EconPapers)
Date: 2002-03
New Economics Papers: this item is included in nep-gth
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP3251 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:3251

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP3251

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().