Selection Efficiency in Multiple-Prize Tournaments with Sabotage

Abstract Sabotage in competitive environments, like sales contests and sports, can hinder the effectiveness of rank-order tournaments in selecting the most capable individuals. Traditional winner-take-all tournaments may unintentionally level the playing field, making it difficult to distinguish the best. Despite extensive research on tournament design, the impact of sabotage on selection efficiency remains underexplored. This paper addresses this gap by investigating how the introduction of multiple-prize structures in rank-order tournaments affects selection efficiency in the presence of sabotage. Our analysis reveals that multiple prizes can improve the selection of high-performing contestants by redirecting sabotage toward weaker opponents, resulting in corner equilibria. In contrast, winner-take-all structures often result in interior equilibria, where promotion chances are equalized. By outlining the conditions under which these equilibria arise, we demonstrate that strategic prize design can enhance performance incentives, mitigate the negative impact of sabotage, and ultimately improve the selection efficiency of rank-order tournaments.