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Intertemporal Effort Provision in Sequential Tournaments

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  • Klein, Arnd Heinrich
  • Schmutzler, Armin

Abstract

This paper analyzes intertemporal effort provision in two-stage tournaments. A principal with a fixed budget for prizes faces two risk-neutral agents. He observes noisy signals of effort in both periods. His goal is to maximize either total efforts (perfect substitutes) or the product of first- and second-period efforts (imperfect substitutes). He decides (i) how to weigh performance in the two periods when awarding the second period prize, (ii) how to spread prize money across the two periods, and (iii) whether to reveal performance after the first period. Under very general conditions, the principal puts positive weight on both periods in period two. Furthermore, he sets no first-period prize provided the observations in period one are too noisy. The information revelation policy depends on the third derivative of the effort cost function.

Suggested Citation

  • Klein, Arnd Heinrich & Schmutzler, Armin, 2013. "Intertemporal Effort Provision in Sequential Tournaments," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79973, Verein für Socialpolitik / German Economic Association.
  • Handle: RePEc:zbw:vfsc13:79973
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    File URL: https://www.econstor.eu/bitstream/10419/79973/1/VfS_2013_pid_648.pdf
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    References listed on IDEAS

    as
    1. Margaret A. Meyer, 1992. "Biased Contests and Moral Hazard: Implications for Career Profiles," Annals of Economics and Statistics, GENES, issue 25-26, pages 165-187.
    2. Florian Ederer, 2010. "Feedback and Motivation in Dynamic Tournaments," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 19(3), pages 733-769, September.
    3. Gershkov, Alex & Perry, Motty, 2009. "Tournaments with midterm reviews," Games and Economic Behavior, Elsevier, vol. 66(1), pages 162-190, May.
    4. repec:adr:anecst:y:1992:i:25-26:p:08 is not listed on IDEAS
    5. Aoyagi, Masaki, 2010. "Information feedback in a dynamic tournament," Games and Economic Behavior, Elsevier, vol. 70(2), pages 242-260, November.
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    Cited by:

    1. Denter, Philipp & Sisak, Dana, 2015. "Do polls create momentum in political competition?," Journal of Public Economics, Elsevier, vol. 130(C), pages 1-14.

    More about this item

    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D00 - Microeconomics - - General - - - General

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