The Effects of Prize Spread and Noise in Elimination Tournaments: A Natural Field Experiment

Josse Delfgaauw, Robert Dur, Arjan Non and Willem Verbeke

Journal of Labor Economics, 2015, vol. 33, issue 3, 521 - 569

Abstract: We conduct a natural field experiment in a retail chain to test predictions of tournament theory regarding prize spread and noise. A random subset of the 208 stores participates in two-stage elimination tournaments. Tournaments differ in the distribution of prize money across winners of the first and second rounds of the tournament. As predicted, we find that a more convex prize spread increases second-round performance at the expense of first-round performance, although the magnitude of these effects is small. Moreover, the treatment effect is larger for stores with more stable past performance.

Date: 2015
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Related works:
Working Paper: The Effects of Prize Spread and Noise in Elimination Tournaments: A Natural Field Experiment (2013)
Working Paper: The Effects of Prize Spread and Noise in Elimination Tournaments: A Natural Field Experiment (2012)
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