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Dynamically Sabotage-Proof Tournaments

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Author Info

  • Junichiro Ishida

    (Graduate school of Economics, Osaka University)

Abstract

This paper examines a two-period tournament where agents may possibly engage in destructive sabotage activities. Under plausible circumstances, sabotage proves to be an effective tool for low-ability agents, especially when they are faced with high-ability agents. The possibility of sabotage then gives rise to a dynamic concern, similar to the Ratchet effect, because an agent runs a risk of becoming the target of sabotage by signaling his high ability in early stages. In this dynamic setting, we first establish an impossibility result where the mere possibility of sabotage makes it impossible to implement the first-best effort due to this dynamic concern. Given this result, we then offer two distinct incentive schemes, fast track and late selection, to circumvent this problem. The fast-track scheme is likely to prevail when the production process values diversity in inputs (submodular technologies) while the late-selection scheme is to prevail when it values homogeneity (supermodular technologies). The present model thus offers a mechanism through which both fast track and late selection arise in a unified framework, which can explain the difference in managerial practices between the US and Japan.

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File URL: http://www.osipp.osaka-u.ac.jp/archives/DP/2006/DP2006E001.pdf
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Bibliographic Info

Paper provided by Osaka School of International Public Policy, Osaka University in its series OSIPP Discussion Paper with number 06E001.

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Length: 27 pages
Date of creation: May 2006
Date of revision:
Handle: RePEc:osp:wpaper:06e001

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Related research

Keywords: Sabotage; Tournament; Fast track; Late selection; Supermodularity; Submodularity;

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References

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  14. Kong-Pin Chen, 2003. "Sabotage in Promotion Tournaments," Journal of Law, Economics and Organization, Oxford University Press, vol. 19(1), pages 119-140, April.
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Citations

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Cited by:
  1. Subhasish M. Chowdhury & Oliver Gurtler, 2013. "Sabotage in Contests: A Survey," University of East Anglia Applied and Financial Economics Working Paper Series 051, School of Economics, University of East Anglia, Norwich, UK..
  2. Gürtler, Oliver & Münster, Johannes, 2009. "Sabotage in dynamic tournaments," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 266, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  3. Gürtler, Oliver & Münster, Johannes, 2013. "Rational self-sabotage," Mathematical Social Sciences, Elsevier, vol. 65(1), pages 1-4.
  4. Junichiro Ishida, 2012. "Promotion without Commitment: Signaling, Time Inconsistency and Decentralization of the Firm," ISER Discussion Paper 0843, Institute of Social and Economic Research, Osaka University.

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