Optimal sorting in group contests with complementarities

Philip Brookins, John Lightle and Dmitry Ryvkin

No wp2014_09_01, Working Papers from Department of Economics, Florida State University

Abstract: Contests between groups of workers are often used to create incentives in organizations. Managers can sort workers into groups in various ways in order to maximize total output. We explore how the optimal sorting of workers by ability in such environments depends on the degree of effort complementarity within groups. For moderately steep costs of effort, we find that the optimal sorting is balanced (i.e., minimizing the variance in ability between groups) when complementarity is weak, and unbalanced (i.e., maximizing the variance in ability) when complementarity is strong. However, when the cost of effort is sufficiently steep, the optimal sorting can be unbalanced for all levels of complementarity or even alternate between unbalanced and balanced as the level of complementarity increases.

Keywords: group contest; complementarity; sorting; heterogeneity (search for similar items in EconPapers)
JEL-codes: C02 C72 D72 (search for similar items in EconPapers)
Pages: 30
Date: 2014-09
New Economics Papers: this item is included in nep-gth, nep-hrm, nep-mic and nep-ore
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: Optimal sorting in group contests with complementarities (2015)
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