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Hybrid Cardinal Tournaments

Author

Listed:
  • Theofanis Tsoulouhas

    () (North Carolina State University)

Abstract

This paper proposes an alternative to standard cardinal tournaments. The analysis contrasts "hybrid" cardinal tournaments to standard cardinal tournaments and piece rates. It shows that providing for partial insurance against common uncertainty via a hybrid tournament (in which the weights on absolute and group average performances are not equal) is always better for the principal than providing for full insurance against common uncertainty via a standard tournament (with equal weights), or than providing for no insurance at all via piece rates. Hybrid tournaments increase the principal's profit because the agents exert more effort in equilibrium.

Suggested Citation

  • Theofanis Tsoulouhas, 2010. "Hybrid Cardinal Tournaments," Economics Bulletin, AccessEcon, vol. 30(3), pages 2279-2288.
  • Handle: RePEc:ebl:ecbull:eb-10-00433
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2010/Volume30/EB-10-V30-I3-P209.pdf
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    References listed on IDEAS

    as
    1. Perez-Castrillo, J David & Verdier, Thierry, 1992. "A General Analysis of Rent-Seeking Games," Public Choice, Springer, vol. 73(3), pages 335-350, April.
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    Cited by:

    1. Fares, M'hand & Orozco, Luis, 2014. "Tournament Mechanism in Wine-Grape Contracts: Evidence from a French Wine Cooperative," Journal of Wine Economics, Cambridge University Press, vol. 9(03), pages 320-345, December.
    2. Hammond, Robert G. & Zheng, Xiaoyong, 2013. "Heterogeneity in tournaments with incomplete information: An experimental analysis," International Journal of Industrial Organization, Elsevier, vol. 31(3), pages 248-260.
    3. Agrawal, Anup & Knoeber, Charles R. & Tsoulouhas, Theofanis, 2006. "Are outsiders handicapped in CEO successions?," Journal of Corporate Finance, Elsevier, pages 619-644.
    4. Kosmas Marinakis & Theofanis Tsoulouhas, 2012. "A comparison of cardinal tournaments and piece rate contracts with liquidity constrained agents," Journal of Economics, Springer, pages 161-190.
    5. Marinakis, Kosmas & Tsoulouhas, Theofanis, 2013. "Are tournaments optimal over piece rates under limited liability for the principal?," International Journal of Industrial Organization, Elsevier, vol. 31(3), pages 223-237.
    6. Agranov, Marina & Tergiman, Chloe, 2013. "Incentives and compensation schemes: An experimental study," International Journal of Industrial Organization, Elsevier, vol. 31(3), pages 238-247.

    More about this item

    Keywords

    Tournaments; contests; piece rates.;

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • D2 - Microeconomics - - Production and Organizations

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