Entry into winner-take-all and proportional-prize contests: An experimental study

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...

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Bibliographic Details
Published in:Journal of public economics 2010-10, Vol.94 (9), p.604-611
Main Authors: Cason, Timothy N., Masters, William A., Sheremeta, Roman M.
Format: Article
Language:English
Subjects:
Competition
Contest
Economic development
Experiments
Feedback
Gender
Payments
Performance pay
Performance pay Tournament Piece rate Tournament design Contest Experiments Risk aversion Feedback Gender
Piece rate
Risk aversion
Technology
Tournament
Tournament design
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Summary: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.
ISSN:0047-2727
1879-2316
DOI:10.1016/j.jpubeco.2010.05.006