Tournaments are often used to improve team performance in innovative environments. Their efficacy may not only stem from monetary incentives and uncertainty about opponents’ performance in such settings, but from the fact that they render teams’ identity and social image concerns salient. This study provides causal evidence on the relative importance of these monetary and behavioral aspects. Using a natural field experiment with more than 1,700 participants, we exogenously vary salience of team identity, social-image concerns, and whether teams face monetary incentives. We find that increased salience of team identity alone does not improve team performance. Social image concerns due to ranking affect mostly top-performing teams, whereas additional monetary incentives improve outcomes for all teams across the performance spectrum. Further, tournaments do not reduce teams’ willingness to explore original solutions and do not seem to crowd out intrinsic motivation
for future tasks.
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