Incentive Effects of Tournament Size Optimization On Local Officials in China

This paper proposes a simple economic intuition that the effectiveness of tournaments is closely related to the number of individuals participating in the competition. Specifically, tournaments with too few (too many) contestants are not conducive to stimulating efforts due to windfalls (sure failure). We model the above ideas and present the importance of a moderately-sized tournament in stimulating individual efforts. As local officials in China participate in competition of tournaments, their efforts would vary with the number of those competing with each other. By examining the exogenous impact of the adjustment of prefecture-level administrative divisions on the tournament size of inter-county competition, we obtain empirical results consistent with the theoretical expectations