MEASURING EFFORT INCENTIVES IN A TOURNAMENT WITH MANY PARTICIPANTS: THEORY AND APPLICATION

Abstract

This article provides an empirical measure to compare incentive effects of different tournament structures. Although there have been many theoretical attempts to analyze incentive effects of a tournament competition, empirical applications are limited as the provided conditions cannot easily be empirically observed. We show that the empirical density of the performance distribution can be used to measure effort incentives in a tournament with many participants. We apply this method to evaluate the grading policy change in the 2008 College Scholastic Ability Test in South Korea. (JEL C70, C51)