Working Paper | HBS Working Paper Series | 2013

Performance Responses to Competition Across Skill-Levels in Rank Order Tournaments: Field Evidence and Implications for Tournament Design

by Kevin J. Boudreau, Constance E. Helfat, Karim R. Lakhani and Michael E. Menietti

Abstract

Tournaments are widely used in the economy to organize production and innovation. We study individual contestant-level data from 2,796 contestants in 774 software algorithm design contests with random assignment. Precisely conforming to theory predictions, the performance response to added contestants varies non-monotonically across contestants of different abilities, most respond negatively to competition, and highest-skilled contestants respond positively. In counterfactual simulations, we interpret a number of tournament design policies (number of competitors, prize allocation and structure, divisionalization, open entry) as a means of reconciling non-monotonic incentive responses to competition, effectively manipulating the number and skills distribution of contestants facing one another.

Keywords: Design; Motivation and Incentives; Competition; Performance;

Citation:

Boudreau, Kevin J., Constance E. Helfat, Karim R. Lakhani, and Michael E. Menietti. "Performance Responses to Competition Across Skill-Levels in Rank Order Tournaments: Field Evidence and Implications for Tournament Design." Harvard Business School Working Paper, No. 14-014, August 2013.