Hybrid Cardinal Tournaments
AbstractThis paper proposes an alternative to standard cardinal tournaments. The analysis contrasts "hybrid" cardinal tournaments to standard cardinal tournaments and piece rates. It shows that providing for partial insurance against common uncertainty via a hybrid tournament (in which the weights on absolute and group average performances are not equal) is always better for the principal than providing for full insurance against common uncertainty via a standard tournament (with equal weights), or than providing for no insurance at all via piece rates. Hybrid tournaments increase the principal's profit because the agents exert more effort in equilibrium.
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Bibliographic InfoArticle provided by AccessEcon in its journal Economics Bulletin.
Volume (Year): 30 (2010)
Issue (Month): 3 ()
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Tournaments; contests; piece rates.;
Find related papers by JEL classification:
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
- D2 - Microeconomics - - Production and Organizations
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- Perez-Castrillo, J David & Verdier, Thierry, 1992. " A General Analysis of Rent-Seeking Games," Public Choice, Springer, vol. 73(3), pages 335-50, April.
- Kosmas Marinakis & Theofanis Tsoulouhas, 2012. "A comparison of cardinal tournaments and piece rate contracts with liquidity constrained agents," Journal of Economics, Springer, vol. 105(2), pages 161-190, March.
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