This research reports the results of an analysis of prize structures among competing firms paying tournament wages. In motorcycle racing, sponsors compete in an auction for riders using tournament prizes as bids. Since racers can only ride one bike and wear one helmet, they are forced to choose among sponsors of similar products. We find that in the face of competition, sponsors are forced to lower the incentive intensity of their prize differentials as rival sponsors post larger purses. Our test offers new corroboration of the Lazear-Rosen tournament model. Other researchers have found that workers respond to bigger prize differentials by working harder. We find that firms recognize this and also recognize that in the competitive labor-market equilibrium this extra work must be compensated by offering higher expected wages through bigger purses. Our results complete the theoretical circle: workers respond to the incentive effects of tournament wages and firms anticipate this behavior when making tournament wage offers.

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Economic models explain human behavior only to the degree that the underlying assumptions of the model are fulfilled. Consumer theory of rational choice has been applied to a wide array of situations. This paper examines the results of the model when a consumer considers bundles of goods, some of which may affect her self image. Under these conditions, wrong decisions are not easily corrected, but can more easily be reversed if the individual is able to forgive herself for having made the wrong decision.

Since the publication of Axel Leijonhufvud's classic “Life among the Econ,” anthropological interest in the species Econ has waned. Unfortunately, one of the omissions from his analysis was a study of life among the tribes to which the unsuccessful grads were exiled. This article looks at the ritual of expulsion from the perspective of the outcast tribes ( subecon) into which the new outcasts seek asylum. The ritual of accepting these new subecon into a new tribe spurs a long and mysterious process in which the basic tenet of the Econ rationality is replaced with what can only be likened to the pon farr and koon ut kal if ee of the Vulcan mating ritual. JEL Classification: A11, A13