Rank-order tournaments as incentive devices: Evidence from a field experiment.
Hessel Oosterbeek (Joint with Edwin Leuven, Joep Sonnemans and Bas van der Klaauw).
Abstract
A vast body of empirical studies lends support to the incentive effects of rank-order tournaments. Direct evidence comes from experiments in laboratories or from non-experimental sports events (golf, tennis). The short duration of the tasks at hand limits the external validity of the findings from these studies. Moreover, non-experimental results may be biased due to self-selection. To address these concerns we conducted a field experiment. Students enrolled in a standard introductory microeconomics course were promised a substantial prize for the best performing student on the course's final exam. Ignoring that we have a control group, we can mimic earlier non-experimental findings. Exploiting the experimental design, we find, however, no evidence of effects of treatment on effort or productivity. The only exception is that treatment has a significant impact on attendance of the first workgroup meeting immediately after the announcement of treatment status, suggesting a difference between short run and long run decision making.
