The optimality of heterogeneous tournaments

Arbeitspapier

We investigate the effect of employee heterogeneity on the incentive to put forth effort in a market-based tournament. Employers use the tournament's outcome to estimate employees' abilities and accordingly condition their wage offers. Employees put forth effort, because by doing so they increase the probability of outperforming the rival, thereby increasing their ability assessment and thus the wage offer. We demonstrate that the tournament outcome provides more information about employees' abilities in case they are heterogeneous. Thus, employees get a higher incentive to affect the tournament outcome, and employers find it optimal to hire heterogeneous contestants.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper Series ; No. IF42V1

Classification and Topics

• Classification: Wirtschaft ; Search; Learning; Information and Knowledge; Communication; Belief; Unawareness ; Human Capital; Skills; Occupational Choice; Labor Productivity ; Wage Level and Structure; Wage Differentials ; Personnel Economics: Firm Employment Decisions; Promotions
• Subject: tournament ; competitive labor market ; heterogeneity ; learning

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Gürtler, Marc ; Gürtler, Oliver
• Event: Veröffentlichung
• (who): Technische Universität Braunschweig, Institut für Finanzwirtschaft
• (where): Braunschweig
• (when): 2013

Further information

• Handle: http://hdl.handle.net/10419/67962
• Last update: 10.03.2025, 11:46 AM CET