Many firms offer extra bonus to motivate their workers. Some bonus schemes reward the workers by absolute performance, while others reward the workers outperforming their peers. How do managers decide whether to reward their workers on their relative performance? In this study, I design a novel experiment that first elicits managers’ beliefs about the effect of tournament incentives on output and their fairness views, then ask them to choose a bonus scheme for two workers in the future. The results show that 1) on average, the managers believe that tournament incentives have positive effects on performance, 2) comparing to paying every worker a flat bonus, most managers find the tournament bonus scheme unfair, and 3) fairness is the most important consideration for the managers’ decisions, until they are gaining from the workers’ output.