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Performance Responses To Competition Across Skill-Levels In Rank Order Tournaments: Field Evidence and Implications For Tournament Design

51 Pages Posted: 9 Aug 2012 Last revised: 21 Jul 2016

Kevin Boudreau

Northeastern University - Innovation & Entrepreneurship; Dept. of Economics; College of Computer & Information Sciences; Harvard University - Institute for Quantitative Social Science; National Bureau of Economic Research (NBER)

Karim R. Lakhani

Harvard Business School - Technology and Operations Management Group; Harvard Institute for Quantitative Social Science; Harvard University - Berkman Klein Center for Internet & Society

Michael E. Menietti

Harvard Business School

Date Written: January 13, 2015

Abstract

Tournaments are widely used in the economy to organize production and innovation. We study individual data on 2,775 contestants in 755 software algorithm development contests with random assignment. The performance response to added contestants varies non-monotonically across contestants of different abilities, precisely conforming to theoretical predictions. Most participants respond negatively, while the highest-skilled contestants respond positively. In counterfactual simulations, we interpret a number of tournament design policies (number of competitors, prize allocation and structure, number of divisions, open entry) and assess their effectiveness in shaping optimal tournament outcomes for a designer.

Keywords: Tournaments, contests, platforms, innovation

JEL Classification: D02, J4, L2, M5

Suggested Citation

Boudreau, Kevin and Lakhani, Karim R. and Menietti, Michael E., Performance Responses To Competition Across Skill-Levels In Rank Order Tournaments: Field Evidence and Implications For Tournament Design (January 13, 2015). Harvard Business School Technology & Operations Mgt. Unit Working Paper No. 14-014. Available at SSRN: https://ssrn.com/abstract=2127310 or http://dx.doi.org/10.2139/ssrn.2127310

Kevin Boudreau (Contact Author)

Northeastern University - Innovation & Entrepreneurship; Dept. of Economics; College of Computer & Information Sciences ( email )

Harvard University - Institute for Quantitative Social Science ( email )

1737 Cambridge St.
Cambridge, MA 02138
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Karim R. Lakhani

Harvard Business School - Technology and Operations Management Group ( email )

Boston, MA 02163
United States
617-495-6741 (Phone)

Harvard Institute for Quantitative Social Science ( email )

1737 Cambridge St.
Cambridge, MA 02138
United States

Harvard University - Berkman Klein Center for Internet & Society ( email )

Harvard Law School
23 Everett, 2nd Floor
Cambridge, MA 02138
United States

Michael E. Menietti

Harvard Business School ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

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