Delegation and Strategic Compensation in Tournaments

Matthias Kräkel

No 17/2000, Bonn Econ Discussion Papers from University of Bonn, Bonn Graduate School of Economics (BGSE)

Abstract: This paper considers a two-stage game with two owners and two managers. On the first stage, the owners choose a linear combination of profits and sales as incentives for their managers. On the second stage, the two managers compete in a tournament against each other. In a symmetric equilibrium, both owners induce their managers to maximize profits. In asymmetric equilibria, however, one owner puts a positive weight on sales and the other a negative weight.

Date: 2000
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bonedp:172000

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