Incentive Effect of Heterogeneity on Performance in Esports

ABSTRACT Tournament theory posits that ex‐ante known heterogeneity in abilities can diminish the effort exerted by participants, leading to reduced overall performance. This article empirically tests this prediction within the context of professional esports, specifically using comprehensive data from the entire competitive history of Counter‐Strike: Global Offensive. The analysis is conducted at both team and player levels, employing generalized additive mixed‐effects models and utilizing three distinct proxy variables for team performance. The findings consistently reveal a negative incentive effect of ex‐ante known ability heterogeneity on performance. Teams and players perform worse when ability differences are apparent before the match. While the direction and statistical significance of this effect remain stable across alternative model specifications, robustness checks reveal that its size can vary depending on model assumptions. These findings confirm tournament theory's predictions in a digital competitive environment.