Dmitry Ryvkin

Fatigue in Dynamic Tournaments

Employee overwork and fatigue are a concern of managers in many organizations, as they may increase health and safety risks and decrease productivity. The problem is especially severe in competitive environments, where compensation and promotions are awarded, explicitly or implicitly, on the basis of relative performance. We propose a theory for, and study experimentally, the phenomenon of fatigue in a dynamic competitive environment. We find that subjects react strongly to changes in the environment related to fatigue and follow the comparative statics of equilibrium predictions. At the same time, within a given environment, subjects behave as if they are unaware of the deteriorating effect of fatigue on their competitiveness.

The optimal allocation of prizes in tournaments of heterogeneous agents

Tournaments are widely used in organizations, explicitly or implicitly, to reward the best-performing employees, e.g., through promotion or bonuses, and/or to punish the worst-performing employees, e.g., through firing or unfavorable job assignments. We explore the impact of the allocation of prizes on the effectiveness of tournament incentive schemes. We show that while multiple prize allocation rules are equivalent when agents are symmetric in their ability, the equivalence is broken in the presence of heterogeneity. Under a wide range of conditions, punishment tournaments, i.e., tournaments that award a low prize to relatively few bottom performers, are optimal for the firm. The reason is that low-ability agents are discouraged less in punishment tournaments, and hence can be compensated less to meet their participation constraints.

The optimal sorting of players in contests between groups

We study how aggregate effort exerted in contests between groups of heterogeneous players depends on the sorting of players into groups. We show that the optimal sorting depends on the curvature of the effort cost function. From the perspective of a contest organizer whose objective is to maximize aggregate effort, it is optimal to sort players in a way that minimizes the variation in ability across groups if the effort cost function is moderately steep. However, for a sufficiently steep effort cost function, the optimal sorting of players may be the one that maximizes the variation in ability across groups.

Environmental context and termination uncertainty in games with a dynamic public bad

We employ a laboratory experiment to investigate the effects of environmental context and termination uncertainty on decisions in a dynamic game with a public bad. Every period the subjects decide on their own production level that generates private revenue and ‘emissions’. Emissions accumulate over time and act as a public bad. We characterize and use as benchmarks the Markov perfect equilibrium and social optimum and find that observed decisions are between the two predictions. We find no significant effect of termination uncertainty on decisions in any except the last few rounds where, in a fixed-end setting, subjects allocate their entire endowment to production. We find a strong effect of environmental context which partially substitutes for experience. The effect of experience is most pronounced in the fixed-end treatment where production allocations and the level of the public bad become lower after the restart.

Strive to be first or avoid being last: An experiment on relative performance incentives

Managers often use tournament incentive schemes which motivate workers to compete for the top, compete to avoid the bottom, or both. In this paper we test the effectiveness and efficiency of these incentive schemes. To do so, we utilize optimal contracts in a principal-agent setting, using a Lazear-Rosen type model that predicts equal effort and efficiency levels for three tournament incentive schemes: reward tournaments, punishment tournaments, and tournaments combining reward and punishment. We test the model s predictions in a laboratory experiment and find that the combination of reward and punishment produces the highest effort from agents, especially in contests of a relatively larger size. Punishment is shown to be more effective and, in larger contests, more efficient than rewards, and it is also the mechanism with the lowest variance of effort. Finally, we show that behavior in all mechanisms is consistent with a model of basic directional and reinforcement learning.

Biased contests for symmetric players

In a biased contest, one of the players has an advantage in the winner determination process. We characterize a novel class of biased contest success functions pertaining to such contests and provide necessary and sufficient conditions for zero bias to be a critical point of arbitrary objectives satisfying certain symmetry restrictions. We, however, challenge the common wisdom that unbiased contests are always optimal when contestants are symmetric ex ante or even ex post. We show that contests with arbitrary favorites, i.e., biased contests of symmetric players, can be optimal in terms of various objectives such as expected aggregate effort, the probability to reveal the stronger player as the winner or expected effort of the winner.

Contests With Doping

Doping, or the use of illegal performance-enhancing drugs, is an epidemic problem in sports ranging from the Olympics to high school athletics. This article presents a theoretical model of doping use in a contest environment. The authors show that, under fairly general conditions, the minimal frequency of random testing to prevent doping use increases in the number of contestants. The presence of even a small penalty, in addition to expulsion from the contest, makes random testing more effective, especially in large contests. For a given testing frequency, the minimal penalty to prevent doping can be nonmonotonic in the number of contestants.

Is more competition always better? An experimental study of extortionary corruption

Despite the abundance of theoretical and empirical studies on corruption, identifying suc- cessful anti-corruption strategies remains a challenge. This paper tests the eectiveness of an anti-corruption policy that is often discussed among practitioners: an increase in com- petition among o¢ cials providing the same good or service. In particular, we investigate whether overlapping jurisdictions reduce extortionary corruption, i.e., bribe demands for the provision of services that clients are entitled to receive. We overcome measurement and iden- ti…cation problems by addressing our research question in the laboratory. We conduct an extortionary bribery experiment where clients apply for a license from one of many available o¢ ces and o¢ cials can demand a bribe on top of the license fee. O¢ cials decide whether or not to demand a bribe and the size of the bribe simultaneously and clients engage in costly search. By manipulating the number of available o¢ ces and the size of search costs we are able to assess whether increasing competition reduces extortionary corruption. We …nd that, if search costs are unaected, increasing the number of providers may actually increase cor- ruption. In particular, our results show that increasing competition has either no eect (if search costs are high) or a positive eect (if search costs are low) on bribe demands. JEL classi…cation codes: D73, D49, C91We test the effectiveness of an anti-corruption policy that is often discussed among practitioners: an increase in competition among officials providing the same good or service. In particular, we investigate whether an increase in overlapping jurisdictions reduces extortionary corruption, i.e., bribe demands for the provision of services that clients are entitled to receive. We overcome measurement and identification problems by addressing our research question in the laboratory. We conduct an extortionary bribery experiment where clients apply for a license from one of many available offices and officials can demand a bribe on top of the license fee. By manipulating the number of available offices and the size of search costs we are able to assess whether increasing competition reduces extortionary corruption. We find that, if search costs are unaffected, increasing the number of providers may actually increase corruption. In particular, our results show that increasing competition has either no eeffect (if search costs are high) or a positive effect (if search costs are low) on bribe demands. We compare our findings to those obtained in a standard market environment and find evidence of different search behaviors in the two settings.

Contests with group size uncertainty: Experimental evidence

In many contest situations, the number of participants is not observable at the time of investment. We design a laboratory experiment to study individual behavior in Tullock (lottery) contests with group size uncertainty. There is a fixed pool of n potential players, each with independent probability q of participating. As shown by Lim and Matros (2009; Games and Economic Behavior, vol. 67, pp. 584-597), the unique symmetric equilibrium investment level in this setting can exhibit nonmonotonicity with respect to both n and q. We independently manipulate each of the parameters and test the implied comparative statics predictions. Our results provide considerable support for the theory, both in terms of comparative statics and point predictions. Most surprisingly, we find no evidence of overbidding in treatments where there is a nontrivial probability that group size is one. This stands in stark contrast to the robust overbidding observed in experimental contests with deterministic group size. We propose a one-parameter model that incorporates nonlinear probability weighting and a modified version of joy of winning, which we call Constant Winning Aspirations (CWA), and show that it neatly organizes all of our results. The CWA model applies to a broad range of contexts and may be used to explain existing evidence on the differences in overbidding across many other contest and auction experiments.

Indefinitely Repeated Contests: An Experimental Study

We experimentally explore indefinitely repeated contests. Theory predicts more cooperation, in the form of lower expenditures, in indefinitely repeated contests with a longer expected time horizon, yet our data do not support this prediction. Theory also predicts more cooperation in indefinitely repeated contests compared to finitely repeated contests of the same expected length, but we find no significant difference empirically. When controlling for risk and gender, we actually find significantly higher long-run expenditure in some indefinite contests relative to finite contests. Finally, theory predicts no difference in cooperation across indefinitely repeated winner-take-all and proportional-prize contests. We find significantly less cooperation in the latter, because female participants expend more on average than their male counterparts in our data. Our paper extends the experimental literature on indefinitely repeated games to contests and, more generally, contributes to an infant empirical literature on behavior in indefinitely repeated games with “large” strategy spaces.