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U-type versus J-type Tournaments as Alternative Solutions to the Unverifiability Problem

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  • Kräkel, Matthias

Abstract

This paper discusses the properties of stylized U.S. ("U-type") and Japanese tournaments ("J-type"), which can both solve the unverifiability problem of labor contracts. Under a zero-profit condition, both tournament types will yield first-best efforts if workers are homogenous and risk neutral. This result will no longer hold for J-type tournaments if the employer has all the bargaining power. However, if workers are rik averse or one worker has a lead a J-type tournament may dominate a U-type tournament.

Suggested Citation

  • Kräkel, Matthias, 2002. "U-type versus J-type Tournaments as Alternative Solutions to the Unverifiability Problem," Bonn Econ Discussion Papers 3/2002, University of Bonn, Bonn Graduate School of Economics (BGSE).
    • Handle: RePEc:zbw:bonedp:32002
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    References listed on IDEAS

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    Cited by:

    1. Matthias Kräkel, 2002. "U-Type versus J-Type Tournaments," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 158(4), pages 614-637, December.

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    More about this item

    Keywords

    Strategic Delegation; Mergers; Oligopoly; Contests;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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