Selection, tournaments, and dishonesty

• We examine the relationship between dishonesty and selection into competition.
• Do honest or dishonest people enter competitive schemes more often?
• Competition increases dishonesty when participants are randomly assigned to schemes.
• With selection, those who are more dishonest select competition more often.

We conduct a real effort experiment in which performance is not monitored and participants are paid according to their reported performance. Participants are paid according to a piece rate and a winner-take-all tournament and then select between the two schemes before performing the task one more time. Competition increases dishonesty and lowers output when the payment scheme is exogenously determined. Participants with a higher propensity to be dishonest are more likely to select into competition. However after selection, we find no output difference between piece rate and tournament. This is attributable to a handful of honest individuals who select competition.