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| Type | Working Paper |
| Scope | Discipline-based scholarship |
| Title | Optimal effort incentives in dynamic tournaments |
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| Institution | University of Zurich |
| Series Name | Working paper series / Department of Economics |
| Number | 175 |
| ISSN | 1664-7041 |
| Number of Pages | 53 |
| Date | 2014 |
| Abstract Text | This paper analyzes two-stage rank-order tournaments. A principal decides (i) how to spread prize money across the two periods, (ii) how to weigh performance in the two periods when awarding the second-period prize, and (iii) whether to reveal performance after the first period. The information revelation policy depends exclusively on properties of the effort cost function. The principal always puts a positive weight on first-period performance in the second period. The size of the weight and the optimal prizes depend on properties of the observation error distribution; they should be chosen so as to strike a balance between the competitiveness of first- and second-period tournaments. In particular, the principal sets no first-period prize unless the observations in period one are considerably more precise than in period two. |
| Official URL | http://www.econ.uzh.ch/static/workingpapers.php |
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| Keywords | dynamic tournaments, repeated contests, information revelation, effort incentives, Dynamisches Spiel, Informationsstruktur, Anreize |