Optimal effort incentives in dynamic tournaments

• 成果类型: Article
• 署名作者: Klein, Arnd Heinrich; Schmutzler, Armin
• 署名单位: University of Zurich; Centre for Economic Policy Research - UK
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2016.02.006
• 发表日期: 2017
• 页码: 199-224
• 关键词: Dynamic tournaments; Repeated contests; feedback; effort incentives

摘要

This paper analyzes two-stage rank-order tournaments. To influence efforts in the two periods, a principal can use the intertemporal prize structure and the weight of first-period performance in the second-period prize. These two instruments implement different sets of effort vectors. We characterize the optimal combination of prizes and weights as a function of parameters. For large parameter regions, the principal should only give a second-period prize, but use positive first-period performance weights. This holds no matter whether efforts in different periods are perfect or imperfect substitutes and whether the principal gives feedback on performance or not. We also generalize existing results on whether giving feedback is beneficial for the principal. (C) 2016 Elsevier Inc. All rights reserved.