We conduct a natural field experiment in a retail chain to test predictions of tournament theory regarding prize spread and noise. A random subset of the 208 stores participates in two-stage elimination tournaments. Tournaments differ in the distribution of prize money across winners of the first and second rounds of the tournament. As predicted, we find that a more convex prize spread increases second-round performance at the expense of first-round performance, although the magnitude of these effects is small. Moreover, the treatment effect is larger for stores with more stable past performance.

We ran a field experiment in a Dutch retail chain consisting of 128 stores. In a random sample of these stores, we introduced short-term sales competitions among subsets of stores. We find that sales competitions have a large effect on sales growth, but only in stores where the store’s manager and a sufficiently large fraction of the employees have the same gender. Remarkably, results are alike for sales competitions with and without monetary rewards, suggesting a high symbolic value of winning a tournament.