Optimal Tournament Contracts for Heterogeneous Workers

We analyze the optimal design of rank-order tournaments with heterogeneous workers. Iftournament prizes do not differ between the workers(uniform prizes), as in the previous tournament literature, the outcome will be ineffcient. In the case of limited liability, the employer may benefit from implementing more than first-best effort. We show that the employer can use individual prizes that satisfy a self-commitment condition and induce effcient incentives at the same time, thus solving a fundamental dilemma in tournament theory. Individual prizes exhibit two major advantages - they allow the extraction of worker rents and the adjustment of individual incentives, which will be important for the employer if he cannot rely on handicaps

All things being equal: Spatiotemporal differences between open and women’s 16-goal polo

Polo is an equestrian team sport, consisting of Open and Women’s only handicapping systems. As cumulative player handicap increases in Open Polo, distance covered, average speeds and high intensity work performed per chukka also increase. These activities may differ in terms of distribution of, and their affect upon, match outcome in Women’s Polo, and thus have implications for equine preparation and management. This study aimed to quantify spatiotemporal differences between Open and Women’s Polo when matched for handicap and assess their affect upon chukka and match outcome using a prospective cohort design. Distance, speed and high intensity activity data were collected via player worn global positioning system (GPS) units during 16-goal Open and Women’s Polo tournaments. Notational analysis quantified chukka duration and chukka and game outcomes. Between group differences were assessed by independent samples t-tests, and two factor mixed effects ANOVA for within group analyses. Between group differences were analysed using an independent samples t-test with alpha defined a priori as p<0.05. Open and Women’s Polo differed by a small to large extent (ES: 0.54 – 1.81) for all spatiotemporal metrics. In Open Polo, players covered moderately more distance (429.0m; 238.9m to 619.0m), with small to large increases in high intensity activities performed in games won. Whereas in Women’s Polo, moderately higher maximum speeds were attained in games won (17.13 km/h; 11.86 km/h to 22.40 km/h) and a small increase in accelerations performed (5.1; 0.2 to 10.0). Open and Women’s Polo, when matched for handicap, present with small to large spatiotemporal differences that are likely of practical significance, and influence game outcome differently between codes. These differences do not necessarily mean that Polo ponies need to be trained differently for each code

Optimal Tournament Contracts for Heterogeneous Workers

We analyze the optimal design of rank-order tournaments with heterogeneous workers. Iftournament prizes do not differ between the workers(uniform prizes), as in the previous tournament literature, the outcome will be ineffcient. In the case of limited liability, the employer may benefit from implementing more than first-best effort. We show that the employer can use individual prizes that satisfy a self-commitment condition and induce effcient incentives at the same time, thus solving a fundamental dilemma in tournament theory. Individual prizes exhibit two major advantages - they allow the extraction of worker rents and the adjustment of individual incentives, which will be important for the employer if he cannot rely on handicaps.heterogenous workers; limited liability;rank-order tournaments; self commitment

Entry into Winner-Take-All and Proportional-Prize Contests: An Experimental Study

This experiment compares the performance of two contest designs: a standard winnertake- 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.performance pay, tournament, piece rate, tournament design, contest, experiments, risk aversion, feedback, gender

Are 18 holes enough for Tiger Woods?

This paper addresses the selection problem in promotion tournaments. I consider a situation with heterogeneous employees and ask whether an employer might be interested in repeating a promotion tournament. On the one hand, this yields a reduction in uncertainty over the employees’ abilities. On the other hand, there are costs if a workplace stays vacant

Tournaments with Ex Post Heterogeneous Agents

This paper compares relative performance evaluation via tournaments to absolute performance evaluation via piece rates when agents are heterogeneous ex post, to make the point that agent heterogeneity compromises the insurance function of tournaments. In particular, we show that the more heterogeneous agents are the less insurance can be offered through tournaments and the less dominant tournaments are over piece rates. Thus, absolute performance piece rates should be preferred when agents are highly heterogeneous. However, even with heterogeneous agents, tournaments become more desirable when the number of agents or the uncertainty about the common shock increases sufficiently.piece rates

A Theoretical and Experimental Investigation of Efficiency, Equity, and Uncertainty in Tournaments

This dissertation consists of three essays centered around labor incentives that arise in relative compensation contracts. Chapter 1 poses the question: if devotion to a core competence were truly optimal, why would firms do otherwise? We argue that the behavior of drifting from the core may be motivated by the competitive incentives faced by managers who seek to rise within a firm. We find competition creates an incentive for a manager to look for less correlated opportunities that pull the firm in a new direction. In a symmetric equilibrium all managers behave this way, leading to lower expected output for the firm. A ?stick? that punishes the lowest performing manager in conjunction with a prize to the top performer can deter such behavior. Chapter 2 investigates how common shocks affect the behavior of heterogeneous agents in contracts designed to achieve both equity and efficiency. We show that when a procedurally fair and efficient tournament is desirable and compensates for heterogeneity, common shocks can bias the probability of winning of the agents. Also, the principal is found to have a commitment problem, favoring low risk agents to win, when fair and efficient tournaments are held between agents with different uncertainty distributions. Chapter 3 uses an experiment to examine issues of fairness and efficiency in rank-order tournaments with agents heterogeneous in abilities and random shock distributions. To study these issues, we observe agent effort, contract choice, and role choice from participating in three contracts that vary in perceptions of equal opportunity: equal access, equal expected earnings, and equal changes of winning. The primary result is that equal pay in the form of equal expected outcomes promotes efficiency and greater perceptions of fairness than does equal access to common contracts

Performance characteristics of a winning polo team

Polo is played globally, and is contested by two teams of four players on horseback. Despite popularity, there is little academic literature assessing Polo players, and what constitutes successful Polo performance. One reason for this may be Polo’s unique player rating system, the handicap, which quantifies individuals and teams’ level of play. We sought to characterise the play of a tournament winning high-goal polo team (KPF) using percent and raw differences between teams using a customised matrix, which was designed with input from international polo players. Secondly, we assessed the association between player handicap and success rates of key performance metrics. KPF won five of seven games played, with forehand middle (FHM) being the least variable shot (-4 to 5% success rate), whereas long backhand shots were the most variable (-50 to 45% success rate). Fewer turnovers were conceded than the opposition in all games won, and in four out of the five winning games, more penalties were awarded to KPF than their opponents. At an individual level, FHM was significantly correlated to player handicap (0.562, Large: p<0.05). Player handicap was also moderately correlated with backhand middle (0.33), backhand long (0.361), and ride off (0.362) success rates. Turnovers and penalties awarded confer clear attacking and goal-scoring opportunities. FHM, backhand shots and ability to contest for the ball (ride off) are key performance metrics, positively associated with player handicap, and higher handicap players demonstrate greater success rates and or less variability than those with lower handicaps. However, variability within players of the same handicap is evident, suggesting subjectivity of the handicapping system

Peer Effects in the Workplace: Evidence from Random Groupings in Professional Golf Tournaments

This paper uses the random assignment of playing partners in professional golf tournaments to test for peer effects in the workplace. We find no evidence that the ability of playing partners affects the performance of professional golfers, contrary to recent evidence on peer effects in the workplace from laboratory experiments, grocery scanners, and soft-fruit pickers. In our preferred specification, we can rule out peer effects larger than 0.045 strokes for a one stroke increase in playing partners' ability, and the point estimates are small and actually negative. We offer several explanations for our contrasting findings: that workers seek to avoid responding to social incentives when financial incentives are strong; that there is heterogeneity in how susceptible individuals are to social effects and that those who are able to avoid them are more likely to advance to elite professional labor markets; and that workers learn with professional experience not to be affected by social forces. We view our results as complementary to the existing studies of peer effects in the workplace and as a first step towards explaining how these social effects vary across labor markets, across individuals and with changes in the form of incentives faced. In addition to the empirical results on peer effects in the workplace, we also point out that many typical peer effects regressions are biased because individuals cannot be their own peers, and suggest a simple correction.