Prize Structure and Information in Tournaments: Experimental Evidence

25 Pages Posted: 5 Dec 2008 Last revised: 26 Nov 2011

See all articles by Richard B. Freeman

Richard B. Freeman

National Bureau of Economic Research (NBER); University of Edinburgh - School of Social and Political Studies; Harvard University; London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP)

Alexander M. Gelber

Wharton School, University of Pennsylvania; National Bureau of Economic Research

Date Written: September 1, 2009

Abstract

This paper examines behavior in a tournament in which we vary the tournament prize structure and the information available about participants' skill at the task of solving mazes. The number of solved mazes is lowest when payments are independent of performance; higher when a single, large prize is given; and highest when multiple, differentiated prizes are given. This result is strongest when we inform participants about the number of mazes they and others solved in a pre-tournament round. Some participants reported that they solved more mazes than they actually solved, and this misreporting also peaked with multiple differentiated prizes.

Suggested Citation

Freeman, Richard B. and Gelber, Alexander M., Prize Structure and Information in Tournaments: Experimental Evidence (September 1, 2009). Available at SSRN: https://ssrn.com/abstract=1311023 or http://dx.doi.org/10.2139/ssrn.1311023

Richard B. Freeman

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