Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/141613
Authors: 
De Paola, Maria
Gioia, Francesca
Scoppa, Vincenzo
Year of Publication: 
2016
Series/Report no.: 
IZA Discussion Papers 9854
Abstract: 
We run a field experiment to investigate whether competing in rank-order tournaments with different prize spreads affects individual performance. Our experiment involved students from an Italian University who took an intermediate exam in which one part was awarded on the basis of their relative performance. Students were matched in pairs on the basis of their high school grades and each pair was randomly assigned to one of three different tournaments. Random assignment neutralizes selection effects and allows us to investigate if larger prize spreads increase individual effort. We do not find any positive effect of larger prizes on students' performance and in several specifications we do find a negative effect. Furthermore, we show that the effect of prize spreads on students' performance depends on their degree of risk-aversion: competing in tournaments with large spreads negatively affects the performance of risk-averse students, while it does not produce any effect on students who are more prone to take risks.
Subjects: 
rank-order tournaments
incentives
prize spread
risk-aversion
randomized experiment
JEL: 
J33
J31
J24
D81
D82
C93
Document Type: 
Working Paper

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