Dynamically Sabotage-Proof Tournaments
AbstractThis article explores the consequences of sabotage for the design of incentive contracts. The possibility of sabotage gives rise to a dynamic concern, similar to the Ratchet effect, which distorts the agents’ incentives. We first show that the mere possibility of sabotage may make it impossible to implement the first-best effort, and we then offer two distinct incentive schemes, fast track and late selection, to circumvent this problem. The present model offers a mechanism through which these two schemes arise in a unified framework.
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Bibliographic InfoArticle provided by University of Chicago Press in its journal Journal of Labor Economics.
Volume (Year): 30 (2012)
Issue (Month): 3 ()
Pages: 627 - 655
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Web page: http://www.journals.uchicago.edu/JOLE/
Other versions of this item:
- Junichiro Ishida, 2006. "Dynamically Sabotage-Proof Tournaments," OSIPP Discussion Paper 06E001, Osaka School of International Public Policy, Osaka University.
- Junichiro Ishida, 2012. "Dynamically Sabotage-Proof Tournaments," ISER Discussion Paper 0838, Institute of Social and Economic Research, Osaka University.
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