Road Warrior Booty: Prize Structures in Motorcycle Racing
21 Pages Posted: 5 Jun 2000
Date Written: March 16, 2000
Abstract
We look at the tournament organizer and its equilibrium adaptation of the tournament structure in the face of competition from other organizers. The data examined come from the motorcycle racing industry. Bikers in a single race compete for the awards of several sponsors and many sponsors are in direct competition. When a racer chooses to compete for the prizes offered by one sponsor, prizes paid by sponsors of similar products are foregone. We find that there is systematic variation in the structure of prize differentials in the face of direct competition among sponsors for endorsements by racers. When the purse paid by competitors goes up, a sponsor must raise its own purse or reduce its incentive intensity by lowering the spread of the prizes that it pays. This finding supports a prediction of the tournament model developed by Lazear and Rosen.
JEL Classification: L11, L14, L83, M37
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
Piece Rate vs. Time Rate: The Effect of Incentives on Earnings
By Eric Seiler
-
Potential, Prizes and Performance: Testing Tournament Theory with Professional Tennis Data
By Uwe Sunde
-
An Economic Evaluation of the Moneyball Hypothesis
By Jahn Karl Hakes and Raymond D. Sauer
-
Contests, Grand Prizes, and the Hot Hand
By Todd Mcfall, Charles R. Knoeber, ...
-
Incentives versus Sorting in Tournaments: Evidence from a Field Experiment
By Edwin Leuven, Hessel Oosterbeek, ...
-
Incentives Versus Sorting in Tournaments: Evidence from a Field Experiment
By Edwin Leuven, Hessel Oosterbeek, ...
-
Team Performance, Efficiency and Wage Distribution in Professional Baseball