Simultaneous- versus Sequential-Move Tournaments with Heterogeneous Agents

Peter-J. Jost and Matthias Kräkel

Schmalenbach Business Review (sbr), 2006, vol. 58, issue 4, 306-331

Abstract: This paper extends the discussion of simultaneous-move tournaments by focusing on the analysis of heterogeneous instead of homogeneous contestants. We show that the principal will not implement first-best efforts even though the agents are risk neutral and not limited in wealth, and despite the principal being able to implement an efficient outcome. At a second step, we compare our results with the equilibrium findings for sequential-move tournaments. We show that agents’ strategic behavior differs significantly in the two setups. In the sequential-move tournament, an underdog can realize a first-mover advantage, but the underdog is never better off in the simultaneous-move tournament. We also discuss the principal’s preferences for the different types of tournaments.

Keywords: Endogenous Ordering of Moves; Heterogeneous Agents; Rank-order Tournaments (search for similar items in EconPapers)
JEL-codes: J3 M12 M52 (search for similar items in EconPapers)
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:sbr:abstra:v:58:y:2006:i:4:p:306-331

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