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Dismissal Tournaments


  • Oliver Gürtler
  • Matthias Kräkel


We consider a dismissal tournament where the loser gets fired. Although the firm takes possible selection failures into account when choosing the optimal tournament design, the selection efficiency of a dismissal tournament is often rather low. This is because low-ability workers, possessing relatively poor outside options, have strong incentives to secure their jobs.

Suggested Citation

  • Oliver Gürtler & Matthias Kräkel, 2012. "Dismissal Tournaments," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 168(4), pages 547-562, December.
  • Handle: RePEc:mhr:jinste:urn:sici:0932-4569(201212)168:4_547:dt_2.0.tx_2-o

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    References listed on IDEAS

    1. 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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    More about this item

    JEL classification:

    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects


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