Tournaments with Ex Post Heterogeneous Agents
This paper compares relative performance evaluation via tournaments to absolute performance evaluation via piece rates when agents are heterogeneous ex post, to make the point that agent heterogeneity compromises the insurance function of tournaments. In particular, we show that the more heterogeneous agents are the less insurance can be offered through tournaments and the less dominant tournaments are over piece rates. Thus, absolute performance piece rates should be preferred when agents are highly heterogeneous. However, even with heterogeneous agents, tournaments become more desirable when the number of agents or the uncertainty about the common shock increases sufficiently.
|Date of creation:||May 2007|
|Date of revision:||Oct 2007|
|Note:||First draft 2007-05|
|Contact details of provider:|| Phone: (919) 515-3274|
Web page: http://www.mgt.ncsu.edu/faculty/economics.html
More information through EDIRC
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.:
- Konrad, Kai A. & Kovenock, Dan, 2006.
"Multi-Stage Contests with Stochastic Ability,"
CEPR Discussion Papers
5844, C.E.P.R. Discussion Papers.
- 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.
- Theofanis Tsoulouhas & Charles R. Knoeber & Anup Agrawal, .
"Contests to Become CEO: Incentives, Selection and Handicaps,"
Working Paper Series
002, North Carolina State University, Department of Economics, revised Jul 2004.
- Theofanis Tsoulouhas & Charles Knoeber & Anup Agrawal, 2007. "Contests to become CEO: incentives, selection and handicaps," Economic Theory, Springer, vol. 30(2), pages 195-221, February.
- Green, Jerry & Stokey, Nancy, 1983.
"A Comparison of Tournaments and Contracts,"
3203644, Harvard University Department of Economics.
- Bhattacharya, Sudipto & Guasch, J Luis, 1988. "Heterogeneity, Tournaments, and Hierarchies," Journal of Political Economy, University of Chicago Press, vol. 96(4), pages 867-81, August.
When requesting a correction, please mention this item's handle: RePEc:ncs:wpaper:015. 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: (Theofanis Tsoulouhas)The email address of this maintainer does not seem to be valid anymore. Please ask Theofanis Tsoulouhas to update the entry or send us the correct email address
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.