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Do Tournaments Have Incentive Effects?

Ronald G. Ehrenberg^1,2,3; Michael L. Bognanno^2,4,5

¹ National Bureau of Economic Research · ² IZA - Institute of Labor Economics · ³ Cornell University · ⁴ Temple College · ⁵ Temple University

Much attention has been devoted to studying models of tournaments or situations in which an individual's payment depends only on his or her output or rank relative to that of other competitors. Under certain sets of assumptions, tournaments have desirable normative properties because of the incentive structures they provide. Our paper uses nonexperimental data to test whether tournaments actually elicit effort responses. We focus on professional golf tournaments because information on the incentive structure (prize distribution) and measures of individual output (players' scores) are both available. We find string support for the proposition that the level and structure of prizes in PGA tournaments influence players performance. Copyright 1990 by University of Chicago Press.

DOI

10.1086/261736

Volume

98 (6)

Pages

1307-1324

Language

en

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