The Cooperative Consequences of Contests

65 Pages Posted: 24 May 2021

See all articles by Jaimie W. Lien

Jaimie W. Lien

The Chinese University of Hong Kong (CUHK) - Department of Decision Sciences & Managerial Economics

Jie Zheng

Tsinghua University - School of Economics & Management

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 pro-social behavior as measured by choices in social dilemma games. Compared to a ranking of compensation schemes based on the correspondence between effort exerted and reward received, our results provide relatively stronger support for the idea that cooperative behavior after a competition is tied to the potential for obtaining ‘fair’ payoff outcomes within the contest. 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)

The Chinese University of Hong Kong (CUHK) - Department of Decision Sciences & Managerial Economics ( email )

Shatin, N.T.
Hong Kong

Jie Zheng

Tsinghua University - School of Economics & Management ( email )

Beijing, 100084
China

HOME PAGE: http://jzheng.weebly.com/

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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