Optimal effort incentives in dynamic tournaments

Arnd Heinrich Klein and Armin Schmutzler

No 175, ECON - Working Papers from Department of Economics - University of Zurich

Abstract: 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 first period. The information revelation policy depends exclusively on properties of the effort cost function. The principal always puts a positive weight on first-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 fi rst- and second-period tour- naments. In particular, the principal sets no first-period prize unless the observations in period one are considerably more precise than in period two.

Keywords: Dynamic tournaments; repeated contests; information revelation; effort incentives (search for similar items in EconPapers)
JEL-codes: D02 D44 (search for similar items in EconPapers)
Date: 2014-10
New Economics Papers: this item is included in nep-cta, nep-hrm and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://www.zora.uzh.ch/id/eprint/99429/1/econwp175-1.pdf (application/pdf)

Related works:
Journal Article: Optimal effort incentives in dynamic tournaments (2017)
Working Paper: Optimal Effort Incentives in Dynamic Tournaments (2015)
Working Paper: Optimal Effort Incentives in Dynamic Tournaments (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zur:econwp:175

Access Statistics for this paper

More papers in ECON - Working Papers from Department of Economics - University of Zurich Contact information at EDIRC.
Bibliographic data for series maintained by Severin Oswald ().