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  • Spring 2016
  • Article
  • RAND Journal of Economics

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

By: Kevin J. Boudreau, Karim R. Lakhani and Michael E. Menietti
  • Format:Print
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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

Competition; Innovation Strategy

Citation

Boudreau, Kevin J., 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." RAND Journal of Economics 47, no. 1 (Spring 2016): 140–165.

About The Author

Karim R. Lakhani

Technology and Operations Management
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