Tournaments with Midterm Reviews
In many tournaments investments are made over time and conducting a review only once at the end, or also at points midway through, is a strategic decision of the tournament designer. If the latter is chosen, then a rule according to which the results of the different reviews are aggregated into a ranking must also be determined. This paper takes a first step in the direction of answering how such rules are optimally designed. A characterization of the optimal aggregation rule is provided for a two-agent two-stage tournament. In particular, we show that treating the two reviews symmetrically may result in an equilibrium effort level that is inferior to the one in which only a final review is conducted. However, treating the two reviews lexicographically by first looking at the final review, and then using the midterm review only as a tie-breaking rule, strictly dominates the option of conducting a final review only. The optimal mechanism falls somewhere in between these two extreme mechanisms. It is shown that the more effective the first-stage effort is in determining the final reviewâ€™s outcome, the smaller is the weight that should be assigned to the midterm review in determining the agentsâ€™ ranking.
|Date of creation:||May 2006|
|Date of revision:|
|Contact details of provider:|| Postal: Geschwister-Scholl-Platz 1, D-80539 Munich, Germany|
Web page: http://www.sfbtr15.de/
More information through EDIRC
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.:
- Moldovanu, Benny & Sela, Aner, 2006.
Journal of Economic Theory,
Elsevier, vol. 126(1), pages 70-96, January.
- Sherwin Rosen, 1985.
"Prizes and Incentives in Elimination Tournaments,"
NBER Working Papers
1668, National Bureau of Economic Research, Inc.
- Florian Ederer, 2010. "Feedback and Motivation in Dynamic Tournaments," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 19(3), pages 733-769, 09.
- Masaki Aoyagi, 2003.
"Information Feedback in a Dynamic Tournament,"
ISER Discussion Paper
0580, Institute of Social and Economic Research, Osaka University.
- Moldovanu, Benny & Sela, Aner, 1999.
"The Optimal Allocation of Prizes in Contests,"
Sonderforschungsbereich 504 Publications
99-75, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
- 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.
- 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.
- Yildirim, Huseyin, 2005. "Contests with multiple rounds," Games and Economic Behavior, Elsevier, vol. 51(1), pages 213-227, April.
- Dubey, Pradeep & Haimanko, Ori, 2003.
"Optimal scrutiny in multi-period promotion tournaments,"
Games and Economic Behavior,
Elsevier, vol. 42(1), pages 1-24, January.
- Pradeep Dubey & Ori Haimanko, 2000. "Optimal Scrutiny in Multi-Period Promotion Tournaments," Cowles Foundation Discussion Papers 1254, Cowles Foundation for Research in Economics, Yale University.
- Gradstein, Mark & Konrad, Kai A, 1999. "Orchestrating Rent Seeking Contests," Economic Journal, Royal Economic Society, vol. 109(458), pages 536-45, October.
- Margaret A. Meyer, 1991. "Learning from Coarse Information: Biased Contests and Career Profiles," Review of Economic Studies, Oxford University Press, vol. 58(1), pages 15-41.
- Dixit, Avinash K, 1987. "Strategic Behavior in Contests," American Economic Review, American Economic Association, vol. 77(5), pages 891-98, December.
When requesting a correction, please mention this item's handle: RePEc:trf:wpaper:145. 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: (Tamilla Benkelberg)
If references are entirely missing, you can add them using this form.