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Self-selection and the Efficiency of Tournaments

Tor Eriksson (), Sabrina Teyssier and Marie Claire Villeval ()

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Abstract: The literature has shown that the overall efficiency of exogenously imposed tournaments is reduced by a high variance in performance. This paper reports results from an experiment analyzing whether allowing subjects to self-select into different payment schemes is reducing the variability of performance in tournaments. We show that when the subjects choose to enter a tournament instead of a piece-rate payment scheme, the average effort is higher and the between-subject variance is substantially lower than when the same payment scheme is imposed. Mainly based on risk aversion, sorting is efficiency-enhancing since it increases the homogeneity of the contestants.

Keywords: Tournament; Performance Pay; Incentives; Sorting; Selection; Experiment (search for similar items in EconPapers)
Date: 2009
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00451600
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Published in Economic Inquiry, Wiley, 2009, 47 (3), pp. 530-548

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https://halshs.archives-ouvertes.fr/halshs-00451600/document (application/pdf)

Related works:
Journal Article: SELF‐SELECTION AND THE EFFICIENCY OF TOURNAMENTS (2009) Downloads
Working Paper: Self-Selection and the Efficiency of Tournaments (2006) Downloads
Working Paper: Self-Selection and the Efficiency of Tournaments (2006) Downloads
Working Paper: Self-selection and the Efficiency of Tournaments (2006)
Working Paper: Self-selection and the Efficiency of Tournaments (2006)
Working Paper: Self-Selection and the Efficiency of Tournaments (2006) Downloads
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