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The Adverse Consequences of Tournaments: Evidence from a Field Experiment

Maria De Paola (), Francesca Gioia () and Vincenzo Scoppa ()

No 9854, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We run a field experiment to investigate whether competing in rank-order tournaments with different prize spreads affects individual performance. Our experiment involved students from an Italian University who took an intermediate exam in which one part was awarded on the basis of their relative performance. Students were matched in pairs on the basis of their high school grades and each pair was randomly assigned to one of three different tournaments. Random assignment neutralizes selection effects and allows us to investigate if larger prize spreads increase individual effort. We do not find any positive effect of larger prizes on students' performance and in several specifications we do find a negative effect. Furthermore, we show that the effect of prize spreads on students' performance depends on their degree of risk- aversion: competing in tournaments with large spreads negatively affects the performance of risk-averse students, while it does not produce any effect on students who are more prone to take risks.

Keywords: rank-order tournaments; incentives; prize spread; risk-aversion; randomized experiment (search for similar items in EconPapers)
JEL-codes: C93 D81 D82 J24 J31 J33 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2016-03
New Economics Papers: this item is included in nep-cbe, nep-edu, nep-exp, nep-hrm, nep-lma and nep-upt
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Published - published in: Journal of Economic Behavior & Organization, 2018, Vol. 151, July, pp. 1–18.

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Related works:
Journal Article: The adverse consequences of tournaments: Evidence from a field experiment (2018) Downloads
Working Paper: The adverse consequences of tournaments: Evidence from a field experiment (2018) Downloads
Working Paper: THE ADVERSE CONSEQUENCES OF TOURNAMENTS: EVIDENCE FROM A FIELD EXPERIMENT (2016) Downloads
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