The Cooperative Consequences of Contests

65 Pages Posted: 24 May 2021 Last revised: 2 May 2022

See all articles by Jaimie W. Lien

Jaimie W. Lien

Shandong University - Center for Economic Research

Jie Zheng

Shandong University - Center for Economic Research

Yilin Zhuo

University of California, Los Angeles (UCLA) - Anderson School of Management

Date Written: May 21, 2021

Abstract

Although contests are recognized theoretically as a highly effective method of motivation, the competitive nature of contests may generate unintended negative effects on social interactions in more general settings beyond contests. Using a laboratory experiment of real effort tasks with treatments varying by compensation schemes (all-pay auction contest, Tullock contest, proportional prize contest, and piece rate payment scheme), we test the relative effect of contest formats on cooperation in social dilemma games. In comparison to a hypothesized ranking of compensation schemes based on the correspondence between effort exerted and reward received (‘Effort Correspondence’), our results provide relatively stronger support for an alternative hypothesis that cooperative behavior after a competition is tied to the potential for obtaining ‘fair’ payoff outcomes within the contest (‘Chance for Fair Division’). Our random re-matching experimental design ensures that our findings do not result from subjects’ rivalry towards specific competitors, but rather represents a more fundamental shift in prosocial attitude. The results have managerial consequences for structuring incentives in the workplace when a combination of competition and cooperation is necessary among workers.

Keywords: contests, compensation schemes, pro-social behavior, cooperation

JEL Classification: C91, D90, J33, M52

Suggested Citation

Lien, Jaimie W. and Zheng, Jie and Zhuo, Yilin, The Cooperative Consequences of Contests (May 21, 2021). Available at SSRN: https://ssrn.com/abstract=3850570 or http://dx.doi.org/10.2139/ssrn.3850570

Jaimie W. Lien (Contact Author)

Shandong University - Center for Economic Research ( email )

Jinan, Shandong 250100
China

Jie Zheng

Shandong University - Center for Economic Research ( email )

Jinan, Shandong 250100
China

HOME PAGE: http://https://meetecon.com/jie/

Yilin Zhuo

University of California, Los Angeles (UCLA) - Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

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