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On the Competition of Asymmetric Agents

Author

Listed:
  • Harbring Christine

    (University of Cologne, Albertus-Magnus-Platz,Köln, Germany)

  • Lünser Gabriele K.

    (University College London,London, United Kingdom of Great Britain and Northern Ireland)

Abstract

Rank-order tournaments are usually implemented in organizations to provide incentives for eliciting employees’ effort and/or to identify the agent with the higher ability, for example in promotion tournaments. We close a gap in the literature by experimentally analyzing a ceteris paribus variation of the prize spread - being the major design feature of tournaments - in a symmetric and an asymmetric setting. We find that effort significantly increases with the prize spread as predicted by standard theory. However, only for sufficiently large prize spreads weak players competing against strong players strain themselves all the more and sorting of agents is feasible.

Suggested Citation

  • Harbring Christine & Lünser Gabriele K., 2008. "On the Competition of Asymmetric Agents," German Economic Review, De Gruyter, vol. 9(3), pages 373-395, August.
    • Handle: RePEc:bpj:germec:v:9:y:2008:i:3:p:373-395
    DOI: 10.1111/j.1468-0475.2008.00438.x
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    Cited by:

    1. Lackner, Mario & Stracke, Rudi & Sunde, Uwe & Winter-Ebmer, Rudolf, 2015. "Are Competitors Forward Looking in Strategic Interactions? Evidence from the Field," Economics Series 319, Institute for Advanced Studies.
    2. Gadi Barlevy & Derek Neal, 2012. "Pay for Percentile," American Economic Review, American Economic Association, vol. 102(5), pages 1805-1831, August.
    3. Josse Delfgaauw & Robert Dur & Arjan Non & Willem Verbeke, 2015. "The Effects of Prize Spread and Noise in Elimination Tournaments: A Natural Field Experiment," Journal of Labor Economics, University of Chicago Press, vol. 33(3), pages 521-569.
    4. Nieken, Petra & Stegh, Michael, 2010. "Incentive Effects in Asymmetric Tournaments Empirical Evidence from the German Hockey League," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 305, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.

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