The tradeoff between performance and quitting in high power tournaments

Chaim Fershtman*, Uri Gneezy

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

31 Scopus citations

Abstract

Tournaments may be characterized by the performance they induce as well as by the rate of quitting and dropouts of participants. Although most of the attention in the literature is on the performance induced by high power incentives, there are many daily situations in which dropouts and quitting are a major concern. Using a field experiment in schools and a model of dynamic tournament we examine the effect of different levels of rewards on the rate of quitting. Our experiment indicates that there is a possible tradeoff between performance and quitting. Strong incentives tournaments induced participants to exert more effort and exhibit a better performance but, at the same time, it induces a higher rate of quitting. We present a multi-stage tournament model that gives rise to a similar characterization.

Original languageEnglish
Pages (from-to)318-336
Number of pages19
JournalJournal of the European Economic Association
Volume9
Issue number2
DOIs
StatePublished - Apr 2011

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