Incentives Versus Sorting in Tournaments: Evidence from a Field Experiment

27 Pages Posted: 9 Jun 2008

See all articles by Edwin Leuven

Edwin Leuven

University of Amsterdam - Faculty of Economics and Business (FEB); IZA Institute of Labor Economics

Hessel Oosterbeek

University of Amsterdam - Research Institute in Economics & Econometrics (RESAM); Tinbergen Institute Amsterdam (TIA); Institute for the Study of Labor (IZA)

J. H. Sonnemans

University of Amsterdam - Faculty of Social and Behavioral Sciences; Tinbergen Institute

Bas van der Klaauw

VU University Amsterdam - Department of Economics; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics; Tinbergen Institute

Multiple version iconThere are 2 versions of this paper

Date Written: January 2008

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.

Keywords: Field Experiments, Incentives, Sorting, Tournaments

JEL Classification: C93, J33, M52

Suggested Citation

Leuven, Edwin and Oosterbeek, Hessel and Sonnemans, J. H. and van der Klaauw, Bas, Incentives Versus Sorting in Tournaments: Evidence from a Field Experiment (January 2008). CEPR Discussion Paper No. DP6670, Available at SSRN: https://ssrn.com/abstract=1140952

Edwin Leuven

University of Amsterdam - Faculty of Economics and Business (FEB) ( email )

Roetersstraat 11
Amsterdam, 1018 WB
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+31 20 525 4310 (Fax)

IZA Institute of Labor Economics

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Germany

Hessel Oosterbeek

University of Amsterdam - Research Institute in Economics & Econometrics (RESAM) ( email )

Roetersstraat 11
Amsterdam
Netherlands
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+31 20 525 5283 (Fax)

HOME PAGE: http://www.fee.uva.nl/scholar/oosterbeek/

Tinbergen Institute Amsterdam (TIA)

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

J. H. Sonnemans

University of Amsterdam - Faculty of Social and Behavioral Sciences ( email )

Kloveniersburgwal 48
Amsterdam, 1012 CX
Netherlands
+31 20 525-4249 (Phone)

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Bas Van der Klaauw (Contact Author)

VU University Amsterdam - Department of Economics ( email )

De Boelelaan 1105
1081 HV Amsterdam
Netherlands
+31 20 444 6120 (Phone)
+31 20 444 6005 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Tinbergen Institute

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

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