What outcome does Tournament Theory predict when considering highly valuable rewards?

Tournament Theory suggests that when rewards are structured as competitions, especially highly valuable ones such as promotions or substantial bonuses, employees are motivated to increase their efforts to enhance their chances of being successful in that competition. The theory posits that the incentive of a large reward can lead employees to exert maximum effort, striving to outperform their peers. This increased effort is driven by the perceived likelihood of winning the tournament, which fosters greater productivity and engagement among employees as they seek to improve their standing relative to their coworkers.

In contrast, the other options do not align with the tenets of Tournament Theory. For instance, the rejection of difficult tasks or the observation that motivation might decrease in lower-level positions lacks the essential premise of competition driving motivation to excel. Additionally, the notion that only senior employees would compete for top rewards does not account for the competitive nature of tournaments, which often involves participation from various levels within an organization. The essence of Tournament Theory is that high-stake rewards can mobilize effort across a broader spectrum of employees, particularly those who are further down in the hierarchy.