Entry into Winner-Take-All and Proportional-Prize Contests: An Experimental Study

Cason, Timothy and Masters, William and Sheremeta, Roman (2010): Entry into Winner-Take-All and Proportional-Prize Contests: An Experimental Study. Published in: Journal of Public Economics

Abstract

This experiment compares the performance of two contest designs: a standard winner-take-all tournament with a single fixed prize, and a novel proportional-payment design in which that same prize is divided among contestants by their share of total achievement. We find that proportional prizes elicit more entry and more total achievement than the winner-take-all tournament. The proportional-prize contest performs better by limiting the degree to which heterogeneity among contestants discourages weaker entrants, without altering the performance of stronger entrants. These findings could inform the design of contests for technological and other improvements, which are widely used by governments and philanthropic donors to elicit more effort on targeted economic and technological development activities.

• Item Type: MPRA Paper
• Language: English
• Keywords: performance pay, tournament, piece rate, tournament design, contest, experiments, risk aversion, feedback, gender
• Subjects: C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C72 - Noncooperative Games; D - Microeconomics > D7 - Analysis of Collective Decision-Making > D72 - Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior; J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J33 - Compensation Packages ; Payment Methods

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