Multiple prizes in tournaments with career concerns

Alvaro J. Name Correa and Huseyin Yildirim

Journal of Economic Theory, 2024, vol. 215, issue C

Abstract: We introduce career concerns into rank-order tournaments and offer a novel explanation for the pervasiveness of multiple prizes. We argue that career-concerned individuals, already facing market pressure to perform, will be reluctant to participate in winner-take-all competitions. To entice them and maximize performance, the organizer promises a softer competition through multiple prizes. We show that the minimum number of prizes is single-peaked in the population's talent variance and increasing in publicly disclosed ranks. We also examine entry fees, talent pre-screening, and prize budget as design tools for tournaments, along with prize allocation.

Keywords: Tournaments; Contests; Career concerns; Ranking; Normal order statistic (search for similar items in EconPapers)
JEL-codes: D72 D86 J31 J41 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:215:y:2024:i:c:s0022053123001746

DOI: 10.1016/j.jet.2023.105778

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