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The Distribution of Prizes in a Match-Play Tournament with Single Eliminations

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  • Sherwin Rosen

Abstract

This paper begins to study the reward-incentive structure in sequential knock-out or elimination tournaments with matched, pairwise comparisons among players at each stage. The prize structure required to elicit constant expected quality of play in all matches throughout the tournament is characterized for competition among equally talented (or perfectly handicapped), players.The incentive maintaining prize structure is shown to concentrate' extra weight on the top ranking prize, a phenomenon observed in most tournaments. More can be said. Prizes that maintain performance incentives at all stages award a constant increment for each match won up to the last stage; and an amount greater than this for the player who wins the final match. Players' incentives to perform in early rounds are propelled by the probability of achieving higher ranks and surviving to later stages where rewards are larger. These continuation options are played out in the final match, so it is only the difference between winning and losing prizes in the finals that controls incentives there. Many athletic tournaments are structured in the manner analyzed here,but the general framework ultimately may have application to certain career games as well. More generally, a tournament structure may he viewed as a statistical, experimental design problem.The prize structure interacts with the design in providing incentives for the best players to survive to the finals and win the top prizes.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 1516.

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Date of creation: Dec 1984
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Handle: RePEc:nbr:nberwo:1516

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  1. Lester G. Telser, 1982. "A Theory of Innovation and Its Effects," Bell Journal of Economics, The RAND Corporation, The RAND Corporation, vol. 13(1), pages 69-92, Spring.
  2. Bengt Holmstrom, 1981. "Moral Hazard in Teams," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 471, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  3. Reinganum, Jennifer F, 1982. "A Dynamic Game of R and D: Patent Protection and Competitive Behavior," Econometrica, Econometric Society, Econometric Society, vol. 50(3), pages 671-88, May.
  4. Kamien, Morton I & Schwartz, Nancy L, 1972. "Timing of Innovations Under Rivalry," Econometrica, Econometric Society, Econometric Society, vol. 40(1), pages 43-60, January.
  5. Rosen, Sherwin, 1981. "The Economics of Superstars," American Economic Review, American Economic Association, American Economic Association, vol. 71(5), pages 845-58, December.
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Cited by:
  1. Alessandro Rossi, 1999. "Incentives in Managerial Compensation: A Survey of Experimental Research. (Draft Paper)," ROCK Working Papers, Department of Computer and Management Sciences, University of Trento, Italy 003, Department of Computer and Management Sciences, University of Trento, Italy, revised 12 Jun 2008.

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