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- Title
SELF-SELECTION AND THE EFFICIENCY OF TOURNAMENTS.
- Authors
ERIKSSON, TOR; TEYSSIER, SABRINA; VILLEVAL, MARIE‐CLAIRE
- Abstract
The literature has shown that the overall efficiency of exogenously imposed tournaments is reduced by a high variance in performance. This article reports results from an experiment analyzing whether allowing subjects to self-select into different payment schemes is reducing the variability of performance in tournaments. We show that when the subjects choose to enter a tournament instead of a piece-rate payment scheme, the average effort is higher and the between-subject variance is substantially lower than when the same payment scheme is imposed. Mainly based on risk aversion, sorting is efficiency enhancing since it increases the homogeneity of the contestants. ( JEL M52, J33, J31, C81, C91)
- Subjects
TOURNAMENTS; RISK aversion; PRODUCTIVITY incentives; FINANCIAL performance; PAYMENT systems; PROFITABILITY; UTILITY theory; LABOR market
- Publication
Economic Inquiry, 2009, Vol 47, Issue 3, p530
- ISSN
0095-2583
- Publication type
Article
- DOI
10.1111/j.1465-7295.2007.00094.x