Sizing Up the Competition: The Interactive Effect of Tournament Prize Structure and Social Identification with Fellow Contestants on Total Effort of Contestants

Abstract

Tournament incentives are common in organizations, and the effectiveness of different proportion of tournament winners at motivating performance is of both practical and theoretical importance. We conduct an experiment in which participants form groups and compete in multiple, sequential tournaments against members of their group. We manipulate participants’ identity with their fellow group members and whether participants compete in a small winner proportion tournament with a single reward or a large winner proportion tournament with multiple rewards. We find that increasing tournament group identity decreases performance under a large winner proportion, but it has no significant effect on performance under a small winner proportion. A supplementary experiment shows that increasing tournament group identity increases other-regarding preference and that a large winner proportion induces less competitiveness than a small winner proportion, which offers an explanation for the results in our main experiment. Implications for theory and practice are discussed.