Target Setting in Tournaments: Theory and Evidence from China

Xing Li, Chong Liu, Xi Weng and Li-An Zhou

The Economic Journal, 2019, vol. 129, issue 623, 2888-2915

Abstract: Motivated by the prevalence of economic targets at all levels of territory administration in China, this article proposes a Tullock contest model to study optimal target setting in a multi-layered tournament-based organisation. In our model, targets are used by upper-level officials to convey the importance of economic growth and incentivise subordinates in the tournaments. Our model predicts a top-down amplification of economic growth targets along the jurisdiction levels, which explains the observed pattern in China. Using both provincial and prefectural-level data, we test the model predictions and find consistent evidence.

Date: 2019
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Citations: View citations in EconPapers (71)

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