The Incentive Effects of Tournaments and Peer Effects in Team Production: Evidence from Esports

Abstract

This paper examines the incentive effects of increased prize differentials and productivity spillovers from substitute coworkers within the context of esports. A direct behavioral measure called “actions per minute (APM)” is utilized to gauge Dota 2 players’ on-field exertion of effort dedicated to winning the game. The results based on empirical analysis support the incentive effects of the convex prize structure of esports tournaments on eliciting effort. Further investigation indicates that the incentive effects of high-stakes esports tournaments are more a result of the size of total prize than the relative prize distribution. It is also found that players who serve subordinate roles are more likely to engage in shirking behavior in the presence of teammates with similar roles.