Testing canonical tournament theory: On the impact of risk, social preferences and utility structure

Arbeitspapier

We use experiments to test comparative statics predictions of canonical tournament theory. Both the roles of principal and agent are populated by human subjects, allowing us to test predictions for both incentive responses and optimal tournament design. Consistent with theory, we observed an incentive effect from raising the winner's prize. However, we also observed several empirical puzzles that appeared to contradict theory. Controlling for social preferences did not resolve the puzzles, although social preferences do influence behavior. It turns out that the puzzles can be explained by the canonical model once the textbook assumption of separable agent utility is relaxed.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 6304

Classification and Topics

• Classification: Wirtschaft ; Asymmetric and Private Information; Mechanism Design ; Economics of Contract: Theory ; Personnel Economics: Compensation and Compensation Methods and Their Effects ; Personnel Economics: Labor Contracting Devices
• Subject: tournaments ; experiment ; social preferences ; contract theory ; Extensives Spiel ; Test ; Soziale Wohlfahrtsfunktion ; Vertragstheorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Sheremeta, Roman M. ; Wu, Steven Y.
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2012

Further information

• Handle: http://hdl.handle.net/10419/58549
• URN: urn:nbn:de:101:1-201204239613
• Last update: 10.03.2025, 11:42 AM CET