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How noise affects effort in tournaments

Author

Listed:
  • Mikhail Drugov

    (New Economic School and CEPR)

  • Dmitry Ryvkin

    (Department of Economics, Florida State University)

Abstract

It is commonly understood that making a tournament ranking process more noisy leads to a reduction in effort exerted by players in the tournament. But what exactly does it mean to have \more noise?" We address this question and show that the level of risk, as measured by the variance or the second-order stochastic dominance order, is not the answer, in general. For rank-order tournaments with arbitrary prizes, equilibrium effort decreases as noise becomes more dispersed, in the sense of the dispersive order. For winner-take-all tournaments, we identify a weaker version of the dispersive order we call quantile stochastic dominance, as well as other orders and entropy measures linking equilibrium effort and noise.

Suggested Citation

  • Mikhail Drugov & Dmitry Ryvkin, 2020. "How noise affects effort in tournaments," Working Papers w0256, New Economic School (NES).
    • Handle: RePEc:abo:neswpt:w0256
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    Cited by:

    1. Bastani, Spencer & Giebe, Thomas & Gürtler, Oliver, 2022. "Simple equilibria in general contests," Games and Economic Behavior, Elsevier, vol. 134(C), pages 264-280.
    2. Dominik Bruckner & Marco Sahm, 2024. "Party Politics: A Contest Perspective," CESifo Working Paper Series 11474, CESifo.
    3. Zhu, Weichao & Wang, Lu & Lang, Youze, 2022. "The costs and benefits of tournament in a frictional labor market," Economic Modelling, Elsevier, vol. 113(C).
    4. Merve İntişah & Mürüvvet Büyükboyacı, 2024. "The role of noise variance on effort in group contests," Theory and Decision, Springer, vol. 97(2), pages 311-346, September.
    5. Ryvkin, Dmitry & Drugov, Mikhail, 2020. "The shape of luck and competition in winner-take-all tournaments," Theoretical Economics, Econometric Society, vol. 15(4), November.
    6. Morgan, John & Tumlinson, Justin & Várdy, Felix, 2022. "The limits of meritocracy," Journal of Economic Theory, Elsevier, vol. 201(C).
    7. Astrid Gamba & Luca Stanca, 2023. "Mis-judging merit: the effects of adjudication errors in contests," Experimental Economics, Springer;Economic Science Association, vol. 26(3), pages 550-587, July.
    8. Letina, Igor & Liu, Shuo & Netzer, Nick, 2023. "Optimal contest design: Tuning the heat," Journal of Economic Theory, Elsevier, vol. 213(C).
    9. Hanming Fang & Ming Li & Zenan Wu, 2022. "Tournament-Style Political Competition and Local Protectionism: Theory and Evidence from China," NBER Working Papers 30780, National Bureau of Economic Research, Inc.
    10. Zhou, Jidong, 2020. "Improved Information in Search Markets," MPRA Paper 100509, University Library of Munich, Germany.
    11. Fang, Hanming & Li, Ming & Wu, Zenan, 2025. "Tournament-style political competition and local protectionism: Theory and evidence from China," Journal of Public Economics, Elsevier, vol. 248(C).
    12. Drugov, Mikhail & Ryvkin, Dmitry, 2020. "Tournament rewards and heavy tails," Journal of Economic Theory, Elsevier, vol. 190(C).
    13. Giebe, Thomas & Gürtler, Oliver, 2024. "Player strength and effort in contests," Working Papers in Economics and Statistics 4/2024, Linnaeus University, School of Business and Economics, Department of Economics and Statistics.

    More about this item

    Keywords

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    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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