Splitting Tournaments

Arbeitspapier

In this paper we investigate how heterogeneous agents choose among tournaments with different prizes. We show that if the number of agents is sufficiently small, multiple equilibria can arise. Depending on how the prize money is split over the tournaments, these may include, for example, a perfect-sorting equilibrium in which high-ability agents compete in the high-prize tournament, while low-ability agents compete for the low prize. However, there are also equilibria in which agents follow a mixed strategy and there can be reverse sorting, i.e. low-ability agents are in the tournament with the high prize, while high-ability agents are in the low-prize tournament. We show that total effort always decreases compared to a single tournament. However, splitting the tournament may increase the effort of low-ability agents.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 5186

Classification and Topics

• Classification: Wirtschaft ; Institutions: Design, Formation, Operations, and Impact ; Microeconomic Policy: Formulation, Implementation, and Evaluation
• Subject: self-selection ; tournament ; heterogeneous agents ; social planner ; Glücksspiel ; Entscheidung bei Unsicherheit ; Gleichgewichtstheorie ; Spieltheorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Leuven, Edwin ; Oosterbeek, Hessel ; van der Klaauw, Bas
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/46035
• Last update: 23.06.2024, 4:45 AM CEST