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Splitting Leagues

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  • Matthias Kräkel

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Abstract

Splitting leagues or tournaments seems to be puzzling when agents are homogeneous and splitting leads to a negative competition effect. However, it can be shown that the principal can nevertheless benefit from splitting. First, splitting can be used as a divide-and-rule strategy by the principal to create additional incentives when collusion among the agents is possible. Second, splitting leagues gives the principal the opportunity to introduce promotions and relegations between nested tournaments (i.e., tournaments that are intertemporally linked), which also enhances incentives.

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Bibliographic Info

Article provided by Springer in its journal Journal of Economics.

Volume (Year): 88 (2006)
Issue (Month): 1 (June)
Pages: 21-48

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Handle: RePEc:kap:jeczfn:v:88:y:2006:i:1:p:21-48

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Web page: http://www.springerlink.com/link.asp?id=108909

Related research

Keywords: collusion; leagues; promotion; relegation; tournaments; J3; J4; M5;

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References

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Cited by:
  1. Sheremeta, Roman, 2009. "Contest Design: An Experimental Investigation," MPRA Paper 52101, University Library of Munich, Germany.
  2. Sheremeta, Roman, 2009. "Essays on Experimental Investigation of Lottery Contests," MPRA Paper 49888, University Library of Munich, Germany.
  3. Evan Osborne, 2008. "Rivalries," Working Papers 0808, International Association of Sports Economists;North American Association of Sports Economists.

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