Harbring, C.; Luenser, G.; (2007) On the competition of asymetric agents. (ELSE Working Papers 251). ESRC Centre for Economic Learning and Social Evolution: London, UK.

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Abstract

Rank-order tournaments are usually implemented in organizations to provide incentives for eliciting employees’ effort and/or to identify the agent with the higher ability, e.g. in promotion tournaments. We close a gap in the literature by experimentally analyzing a ceteris paribus variation of the prize spread – being the major design feature of tournaments – in a symmetric and an asymmetric setting. We find that effort significantly increases with the prize spread as predicted by standard theory. However, only if the prize spread is sufficiently large weak players competing against strong players strain themselves all the more and sorting of agents is feasible.

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