An empirical test of tournament theory: the senior PGA tour

Article Abstract:

Using data from the Senior PGA Tours we analyze the incentive effects of rank order tournaments. Previous studies using data from the PGA Tour reached conflicting conclusions. To resolve the issue, the Senior PGA Tour was chosen for its unique format where players are not cut from the tournament before completion, eliminating any survival bias. The findings support the hypothesis that the level of prizes in Senior PGA tournaments influences players' performance, indicating that tournaments can be used to motivate performance.

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Professional golf: labor or leisure

Article Abstract:

Although most labor and microeconomic textbooks contain a theoretical discussion of the backward-bending labor supply curve, scant empirical evidence of this phenomenon exists. In this paper we investigate the behavior of PGA golf professionals as they make labor-leisure choices for performing on the PGA Tour. Using tournament theory to model this labor market and data from tournament performances over three separate years, we find significant evidence that higher paid PGA Tour players do indeed operate in the backward-bending region of their labor supply curves.

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Risk taking in tournaments

Article Abstract:

Tournament theory provides important insights into organizational reward systems. It examines the incentive properties of reward systems based on rank-order rather than absolute individual performance. Tournament theory may explain the pattern of managerial pay. It may also explain risk-taking behavior by mutual fund managers. We use data from the PGA tour to examine the pattern of risk-taking by professional golfers in an explicit tournament. The PGA tour provides a natural laboratory where such behavior can be studied. Our evidence shows that behavior by players in golf tournaments is consistent with the predictions of tournament theory.

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