Prizes and Incentives in Elimination Tournaments
Sequential-elimination career games promote survival-of-the-fittest competitors. However, top prizes must be elevated to provide performance incentives in later stages of the game. The option value of achieving a high rank encourages performance effort in early rounds, but the continuation option plays out toward the finals. Concentrating an extra share of the purse on the top prize replaces the option value of early stage competition and ensures that contestants who have achieved high ranks do not rest of their laurels in attempting to climb higher. Copyright 1986 by American Economic Association.
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Volume (Year): 76 (1986)
Issue (Month): 4 (September)
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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bengt Holmstrom, 1982.
"Moral Hazard in Teams,"
Bell Journal of Economics,
The RAND Corporation, vol. 13(2), pages 324-340, Autumn.
- Malcomson, James M, 1984. "Work Incentives, Hierarchy, and Internal Labor Markets," Journal of Political Economy, University of Chicago Press, vol. 92(3), pages 486-507, June.
- Green, Jerry & Stokey, Nancy, 1983.
"A Comparison of Tournaments and Contracts,"
3203644, Harvard University Department of Economics.
- Glenn C. Loury, 1979. "Market Structure and Innovation," The Quarterly Journal of Economics, Oxford University Press, vol. 93(3), pages 395-410.
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