Rank-order tournaments as incentive devices : evidence from a field experiment

A vast body of empirical studies lends support to the incentive effects of rank-order tournaments. Direct evidence comes from experiments in laboratories or from non-experimental sports events (golf, tennis). The short duration of the tasks at hand or the lack of distractors may limit the external validity of the findings from these studies. Moreover, non-experimental results can be biased due to self-selection. To address these concerns we conducted a field experiment where the best performing student on the final exam of a standard introductory micreconomics course could win a substantial financial reward. A standard non-experimental analysis confirms earlier findings. We find however no evidence of effects of treatment on effort or productivity when we exploit our experimental design. The only exception is that treatment has a significant impact on attendance of the first workgroup meeting immediately after the announcement of treatment status, suggesting a difference between short run and long run decision making.