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Incentives Versus Sorting in Tournaments: Evidence from a Field Experiment

Author

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  • Oosterbeek, Hessel
  • van der Klaauw, Bas
  • Leuven, Edwin
  • Sonnemans, Joep

Abstract

A vast body of empirical studies lends support to the incentive effects of rank-order tournaments. Evidence comes from experiments in laboratories and non-experimental studies exploiting sports or firm data. Selection of competitors across tournaments may bias these non-experimental studies, whereas short task duration or lack of distracters may limit the external validity of results obtained in lab experiments or from sports data. To address these concerns we conducted a field experiment where students selected themselves into tournaments with different prizes. Within each tournament the best performing student on the final exam of a standard introductory microeconomics course could win a substantial financial reward. A standard non-experimental analysis exploiting across tournament variation in reward size and competitiveness confirms earlier findings. We find however no evidence for effects of tournament participation on study effort and exam results when we exploit our experimental design, indicating that the non-experimental results are completely due to sorting. Treatment only affects attendance of the first workgroup meeting following the announcement of treatment status, suggesting a difference between short-run and long-run decision making.

Suggested Citation

  • Oosterbeek, Hessel & van der Klaauw, Bas & Leuven, Edwin & Sonnemans, Joep, 2008. "Incentives Versus Sorting in Tournaments: Evidence from a Field Experiment," CEPR Discussion Papers 6670, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:6670
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    More about this item

    Keywords

    Field experiments; Incentives; Sorting; Tournaments;
    All these keywords.

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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