Turning Up the Heat: The Discouraging Effect of Competition in Contests

S-Tier
Journal: Journal of Political Economy
Year: 2020
Volume: 128
Issue: 5
Pages: 1940 - 1975

Authors (3)

Dawei Fang (not in RePEc) Thomas Noe (not in RePEc) Philipp Strack (Yale University)

Score contribution per author:

2.681 = (α=2.01 / 3 authors) × 4.0x S-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

We study contests in which contestants are homogeneous and have convex effort costs. Increasing contest competitiveness, by making prizes more unequal, scaling up the competition, or adding new contestants, always discourages effort. These results have significant implications: although often criticized as evidence of laxity or cronyism, muting competition (e.g., adopting softer grading curves or less high-powered promotion systems) can both reduce inequality and increase output. Holding promotion contests at the division level rather than the firm level can boost employees’ effort. Our results are also consistent with personnel policies that feature egalitarian pay systems and dismissal of worst-performing employees.

Technical Details

RePEc Handle
repec:ucp:jpolec:doi:10.1086/705670
Journal Field
General
Author Count
3
Added to Database
2026-01-29