The shape of luck and competition in winner-take-all tournaments

• 成果类型: Article
• 署名作者: Ryvkin, Dmitry; Drugov, Mikhail
• 署名单位: State University System of Florida; Florida State University; New Economic School; Centre for Economic Policy Research - UK
• 刊物名称: THEORETICAL ECONOMICS
• ISSN/ISSBN: 1933-6837
• DOI: 10.3982/TE3824
• 发表日期: 2020-11-01
• 页码: 1587-1626
• 关键词: Tournament; COMPETITION; Heavy Tails; stochastic number of players; unimodality; log supermodularity; failure rate

摘要

In winner-take-all tournaments, agents' performance is determined jointly by effort and luck, and the top performer is rewarded. We study the impact of the shape of luck-the details of the distribution of performance shocks-on incentives in such settings. We are concerned with the effects of increasing the number of competitors, which can be deterministic or stochastic, on individual and aggregate effort. We show that these effects are determined by the shape of the density and failure (hazard) rate of the distribution of shocks. When shocks have heavy tails, aggregate effort can decrease in the number of competitors.