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Tournaments, Risk Perceptions, And Fairness

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  • Wu, Steven Y.
  • Roe, Brian E.

Abstract

This paper reports the results of an economic experiment investigating human subjects' preferences for two types of contracts tournaments and fixed performance standard contracts. Willingness to pay data was elicited through an auction and results suggest that subjects prefer fixed performance standard contracts to tournaments. Primary drivers of this result appear to be subjects' perceptions that tournaments are more risky and less fair than fixed performance standard contracts. Surprisingly, measures of the relative profitability of the contracts did not correlate with willingness to pay. Our results can shed light on why agricultural producers express frustration over tournaments and can provide insights on contract and policy design.

Suggested Citation

  • Wu, Steven Y. & Roe, Brian E., 2004. "Tournaments, Risk Perceptions, And Fairness," 2004 Annual meeting, August 1-4, Denver, CO 20154, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea04:20154
    DOI: 10.22004/ag.econ.20154
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    References listed on IDEAS

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