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Splitting Leagues

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  • Matthias Kräkel

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

Paper provided by University of Bonn, Germany in its series Bonn Econ Discussion Papers with number bgse6_2003.

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Length: 41
Date of creation: Apr 2003
Date of revision:
Handle: RePEc:bon:bonedp:bgse6_2003

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Keywords: collusion; leagues; promotion; relegation; tournament;

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References

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  1. Luis Garicano & Ignacio Palacios-Huerta, 2001. "An Empirical Examination of Multidimensional Effort in Tournaments," Working Papers 2001-14, Brown University, Department of Economics.
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Cited by:
  1. Sheremeta, Roman, 2009. "Contest Design: An Experimental Investigation," MPRA Paper 52101, University Library of Munich, Germany.
  2. Evan Osborne, 2008. "Rivalries," Working Papers 0808, International Association of Sports Economists;North American Association of Sports Economists.
  3. Sheremeta, Roman, 2009. "Essays on Experimental Investigation of Lottery Contests," MPRA Paper 49888, University Library of Munich, Germany.

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