Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/58549
Authors: 
Sheremeta, Roman M.
Wu, Steven Y.
Year of Publication: 
2012
Series/Report no.: 
Discussion Paper series, Forschungsinstitut zur Zukunft der Arbeit 6304
Abstract: 
We use experiments to test comparative statics predictions of canonical tournament theory. Both the roles of principal and agent are populated by human subjects, allowing us to test predictions for both incentive responses and optimal tournament design. Consistent with theory, we observed an incentive effect from raising the winner's prize. However, we also observed several empirical puzzles that appeared to contradict theory. Controlling for social preferences did not resolve the puzzles, although social preferences do influence behavior. It turns out that the puzzles can be explained by the canonical model once the textbook assumption of separable agent utility is relaxed.
Subjects: 
tournaments
experiment
social preferences
contract theory
JEL: 
D03
D82
D86
M52
M55
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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