Measuring The Sorting and Incentive Effects of Tournament Prizes

Abstract

Prizes and ability influence both choices of tournaments and effort exerted during a tournament. The number of participants close in ability to an individual also impacts his effort. These are two of the novelties of our model with which we quantify the sorting and incentive effects of tournament prizes using unique data of road running race results. We show that the sorting and incentive effects are inter-related and that the impact of prizes is heterogeneous across runners in the same race. The study sheds light on the nature of other economically significant tournaments where data is less available.