U-type versus J-type Tournaments as Alternative Solutions to the Unverifiability Problem

Matthias Kräkel

No 3/2002, Bonn Econ Discussion Papers from University of Bonn, Bonn Graduate School of Economics (BGSE)

Abstract: This paper discusses the properties of stylized U.S. ("U-type") and Japanese tournaments ("J-type"), which can both solve the unverifiability problem of labor contracts. Under a zero-profit condition, both tournament types will yield first-best efforts if workers are homogenous and risk neutral. This result will no longer hold for J-type tournaments if the employer has all the bargaining power. However, if workers are rik averse or one worker has a lead a J-type tournament may dominate a U-type tournament.

Keywords: Strategic Delegation; Mergers; Oligopoly; Contests (search for similar items in EconPapers)
JEL-codes: J31 J33 (search for similar items in EconPapers)
Date: 2002
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bonedp:32002

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