In this article we show that sorting different ability contestants in piece rate tournaments into more homogenous groups alters agents' incentives to exert effort. We propose a method for structurally estimating the piece rate tournament game with heterogenous players and apply it to the payroll data from a broiler production contract. Our counterfactual analysis shows that under reasonable assumptions, both the principal and the growers can gain when the tournament groups are heterogenized.

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... s business strategy could be difficult to implement in real-life settings, however. This article has supplementary material online.