Simultaneous- versus Sequential-Move Tournaments with Heterogeneous Agents
AbstractThis paper extends the discussion of simultaneous-move tournaments by focusing on the analysis of heterogeneous instead of homogeneous contestants. We show that the principal will not implement first-best efforts even though the agents are risk neutral and not limited in wealth, and despite the principal being able to implement an efficient outcome. At a second step, we compare our results with the equilibrium findings for sequential-move tournaments. We show that agents’ strategic behavior differs significantly in the two setups. In the sequential-move tournament, an underdog can realize a first-mover advantage, but the underdog is never better off in the simultaneous-move tournament. We also discuss the principal’s preferences for the different types of tournaments.
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Bibliographic InfoArticle provided by LMU Munich School of Management in its journal Schmalenbach Business Review.
Volume (Year): 58 (2006)
Issue (Month): 4 (October)
Endogenous Ordering of Moves; Heterogeneous Agents; Rank-order Tournaments;
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