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> don't make people compete by limiting the prize pool

That is an interesting idea and it probably works in some rare situations. But unfortunately, most of the time, we only have limited resources and so a limited prize pool. The question, for managers/politicians/capitalists, usually is how do we get maximum motivation out of a limited rewards budget.

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I don't a reason why it should work only in rare situations. This seems perfectly suited for companies - after all, you make money directly off increased productivity of each of your workers. Just keep the reward smaller than what you'd expect to gain from increased productivity, and it should be possible to sustain this system.

I have run a few small companies (up to 30 employees/contractors), and FWIW my experience doesn't match your assumptions. At the end of a year you've made a limited amount of profit and you want to distribute part of it to the personal. The most efficient way I found is to give 80% to the few top performers - the people who work 100+ hour work weeks or have more connections (sales) or are smarter (IT). The others you can easily replace plus bonuses don't seem to increase much the productivity of the averagely lazy. Surely this is just another anecdote.

I haven't run any company myself so I'm just theorizing here anyway. Thanks for sharing your experience.

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