Entry into Winner-Take-All and Proportional-Prize Contests: An Experimental Study

27 Pages Posted: 6 Feb 2011

See all articles by Roman M. Sheremeta

Roman M. Sheremeta

Case Western Reserve University

Timothy N. Cason

Purdue University - Krannert School of Management

William A. Masters

Tufts University - Friedman School of Nutrition Science and Policy; Tufts University - Department of Economics

Date Written: April 1, 2010

Abstract

This experiment compares the performance of two contest designs: a standard winner-take-all tournament with a single fixed prize, and a novel proportional-payment design in which that same prize is divided among contestants by their share of total achievement. We find that proportional prizes elicit more entry and more total achievement than the winner-take-all tournament. The proportional-prize contest performs better by limiting the degree to which heterogeneity among contestants discourages weaker entrants, without altering the performance of stronger entrants. These findings could inform the design of contests for technological and other improvements, which are widely used by governments and philanthropic donors to elicit more effort on targeted economic and technological development activities.

Keywords: performance pay, tournament, piece rate, tournament design, contest, experiments, risk aversion, feedback, gender

JEL Classification: C72, D72, J33

Suggested Citation

Sheremeta, Roman M. and Cason, Timothy N. and Masters, William A., Entry into Winner-Take-All and Proportional-Prize Contests: An Experimental Study (April 1, 2010). Available at SSRN: https://ssrn.com/abstract=1755608 or http://dx.doi.org/10.2139/ssrn.1755608

Roman M. Sheremeta (Contact Author)

Case Western Reserve University ( email )

10900 Euclid Ave.
Cleveland, OH 44106
United States

Timothy N. Cason

Purdue University - Krannert School of Management ( email )

1310 Krannert Building
West Lafayette, IN 47907-1310
United States
765-494-1737 (Phone)

William A. Masters

Tufts University - Friedman School of Nutrition Science and Policy ( email )

150 Harrison Avenue
Boston, MA 02111
United States

HOME PAGE: http://sites.tufts.edu/willmasters

Tufts University - Department of Economics ( email )

Medford, MA 02155
United States

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