Optimal scrutiny in multi-period promotion tournaments
Consider a principal who hires heterogeneous agents to work for him over T periods, without prior knowledge of their respective skills, and intends to promote one of them at the end. In each period the agents choose effort levels and produce random outputs, independently of each other, and are fully informed of the past history of outputs. The principal's major objective is to maximize the total expected output, but he may also put some weight on detecting the higher-skilled agent for promotion. To this end, he randomly samples n out of the T periods and awards the promotion to the agent who produces more on the sample. This determines an extensive form game Gamma (T,n), which we analyze for its subgame perfect equilibria in behavioral strategies. We show that the principal will do best to always choose a small sample size n. More precisely, if eta(T) is the maximal optimal sample size, then eta(T)/T approaches 0 as T approaches infinity.
(This abstract was borrowed from another version of this item.)
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
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.:
- Green, Jerry R & Stokey, Nancy L, 1983.
"A Comparison of Tournaments and Contracts,"
Journal of Political Economy,
University of Chicago Press, vol. 91(3), pages 349-64, June.
- Jerry R. Green & Nancy L. Stokey, 1982. "A Comparison of Tournaments and Contracts," NBER Working Papers 0840, National Bureau of Economic Research, Inc.
- Green, Jerry & Stokey, Nancy, 1983. "A Comparison of Tournaments and Contracts," Scholarly Articles 3203644, Harvard University Department of Economics.
- Dubey, Pradeep & Kaneko, Mamoru, 1984.
"Information patterns and Nash equilibria in extensive games: 1,"
Mathematical Social Sciences,
Elsevier, vol. 8(2), pages 111-139, October.
- Dubey, Pradeep & Kaneko, Mamoru, 1985. "Information patterns and Nash equilibria in extensive games -- II," Mathematical Social Sciences, Elsevier, vol. 10(3), pages 247-262, December.
- Pradeep Dubey & Mamoru Kaneko, 1983. "Information Patterns and Nash Equilibria in Extensive Games," Cowles Foundation Discussion Papers 676, Cowles Foundation for Research in Economics, Yale University.
- Sherwin Rosen, 1985.
"Prizes and Incentives in Elimination Tournaments,"
NBER Working Papers
1668, National Bureau of Economic Research, Inc.
- Lazear, Edward P & Rosen, Sherwin, 1981.
"Rank-Order Tournaments as Optimum Labor Contracts,"
Journal of Political Economy,
University of Chicago Press, vol. 89(5), pages 841-64, October.
- Cowen, Tyler & Glazer, Amihai, 1996. "More monitoring can induce less effort," Journal of Economic Behavior & Organization, Elsevier, vol. 30(1), pages 113-123, July.
When requesting a correction, please mention this item's handle: RePEc:eee:gamebe:v:42:y:2003:i:1:p:1-24. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.