Optimal Effort Incentives in Dynamic Tournaments

Konferenzbeitrag

This paper analyzes two-stage rank-order tournaments. A principal decides (i) how to spread prize money across the two periods, (ii) how to weigh performance in the two periods when awarding the second-period prize, and (iii) whether to reveal performance after the rst period. The information revelation policy depends exclusively on properties of the e ort cost function. The principal always puts a positive weight on rst-period performance in the second period. The size of the weight and the optimal prizes depend on properties of the observation error distribution; they should be chosen so as to strike a balance between the competitiveness of rst- and second-period tour- naments. In particular, the principal sets no rst-period prize unless the observations in period one are considerably more precise than in period two

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Beiträge zur Jahrestagung des Vereins für Socialpolitik 2015: Ökonomische Entwicklung - Theorie und Politik - Session: Contracts, Institutions, Tournaments ; No. C12-V3

Classification and Topics

• Classification: Wirtschaft ; Institutions: Design, Formation, Operations, and Impact ; Economics of Contract: Theory ; Firm Behavior: Theory

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Schmutzler, Armin ; Klein, Arnd
• Event: Veröffentlichung
• (when): 2015

Further information

• Handle: http://hdl.handle.net/10419/112882
• Last update: 10.03.2025, 11:41 AM CET