Splitting Tournaments

Edwin Leuven, Hessel Oosterbeek and Bas van der Klaauw

No 5186, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In this paper we investigate how heterogeneous agents choose among tournaments with different prizes. We show that if the number of agents is sufficiently small, multiple equilibria can arise. Depending on how the prize money is split over the tournaments, these may include, for example, a perfect-sorting equilibrium in which high-ability agents compete in the high-prize tournament, while low-ability agents compete for the low prize. However, there are also equilibria in which agents follow a mixed strategy and there can be reverse sorting, i.e. low-ability agents are in the tournament with the high prize, while high-ability agents are in the low-prize tournament. We show that total effort always decreases compared to a single tournament. However, splitting the tournament may increase the effort of low-ability agents.

Keywords: self-selection; tournament; heterogeneous agents; social planner (search for similar items in EconPapers)
JEL-codes: D02 D04 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2010-09
New Economics Papers: this item is included in nep-cdm, nep-cta and nep-gth
References: Add references at CitEc
Citations:

Downloads: (external link)
https://docs.iza.org/dp5186.pdf (application/pdf)

Related works:
Working Paper: Splitting Tournaments (2010)
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:iza:izadps:dp5186

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().