We analyze tournaments of heterogeneous players from an organizer’s perspective. Using a simple model of a noisy tournament, we demonstrate how the likelihood of selecting the best player, here termed the “predictive power” of a tournament, depends on the tournament format, the distribution of players’ types, and the overall noise level. We formalize the organizer’s decision problem for varying time and measurement costs and compare the predictive power of three widely used tournament formats – contests, binary elimination tournaments, and round-robin tournaments. We show which formats are preferred in the various scenarios and find that for certain parameter constellations, certain formats are not viable.
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Paper provided by The Center for Economic Research and Graduate Education - Economic Institute, Prague in its series CERGE-EI Working Papers with number
wp303.
Find related papers by JEL classification: C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General D21 - Microeconomics - - Production and Organizations - - - Firm Behavior
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