Tournaments have long been used as a resource allocation device. Regardless of the margin of victory, a tournament's champion is typically rewarded far more handsomely than are its losers. For this reason, a tournament can generally be expected to elicit spectacular levels of performance from a group of competitors; performances in professional golf tournaments are an example. Surprisingly, the analysis in this paper indicates the existence of no significant relationship between the rewards and performances of participants in the NCAA basketball tournament. To explain this finding we allude to the classic principal-agent problem.
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Paper provided by Ball State University, Department of Economics in its series Working Papers with number
199601.
Length: 14 pages Date of creation: Jan 1996 Date of revision:
Jan 1997 Publication status: Published in Journal of Economics and Finance 21 no. 1 (1997): 61-68. Handle: RePEc:bsu:wpaper:199601
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