Discussion Papers, Department of Finance and Management Science, Norwegian School of Economics (NHH)
No 2008/23:
Tournaments with prize-setting agents
Kristoffer W. Eriksen ()
, Ola Kvaløy ()
and Trond E. Olsen ()
Abstract: In many tournaments it is the contestants themselves who
determine reward allocation. Labor-union members bargain over wage
distribution, and many firms allow self-managed teams to freely determine
internal resource allocation, incentive structure, and division of labour.
We analyze, and test experimentally, a rank-order tournament where
heterogenous agents determine the spread between winner prize and looser
prize. We investigate the relationship between prize spread, uncertainty
(i.e. noise between e€ort and performance), heterogeneity and effort. The
paper challenges well-known results from tournament theory. We find that a
large prize spread is associated with low degree of uncertainty and high
degree of heterogeneity, and that heterogeneity triggers effort. By and
large, our real-effort experiment supports the theoretical predictions.
Keywords: Rank-order tournament; prize spread; ability-difference; (follow links to similar papers)
JEL-Codes: C30; (follow links to similar papers)
31 pages, October 17, 2008
Before downloading any of the electronic versions below
you should read our statement on
copyright.
Download GhostScript
for viewing Postscript files and the
Acrobat Reader for viewing and printing pdf files.
Full text versions of the paper:
2308.pdf 
Download Statistics
Questions (including download problems) about the papers in this series should be directed to Stein Fossen ()
Report other problems with accessing this service to Sune Karlsson ()
or Helena Lundin ().
Programing by
Design by Joachim Ekebom
