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Optimal Allocation of Heterogeneous Agents in Contests

25 Pages Posted: 1 Oct 2007  

Martin Grossmann

University of Zurich

Helmut M. Dietl

University of Zurich - Department of Business Administration (IBW)

Date Written: September 28, 2007

Abstract

In this paper, we discuss a manager's allocation problem. Two managers allocate their heterogeneous employees - each manager allocates two high types and two low types - in groups of two in order to compete for an exogenous contest prize in a two period model. There are three possibilities of groups' constellation depending on manager's allocation decision: Strong groups (two high types), balanced groups (one high and one low type) and weak groups (two low types). These allocations determine the managers' performance. We show that equilibria in a simultaneous as well as in a sequential game only depend on the difference of the heterogeneous groups' outputs. Furthermore, we show that there is no second mover advantage according this model. Therefore, firms' performances are independent of the model's timing. A typical application of the model fits to coaches' decisions in ice hockey concerning the optimal constellation of the first, second, third (and so forth) lines.

Keywords: Contest, Sports

JEL Classification: L83

Suggested Citation

Grossmann, Martin and Dietl, Helmut M., Optimal Allocation of Heterogeneous Agents in Contests (September 28, 2007). Available at SSRN: https://ssrn.com/abstract=1017826 or http://dx.doi.org/10.2139/ssrn.1017826

Martin Grossmann (Contact Author)

University of Zurich ( email )

Plattenstrasse 14
CH-8032 Zürich, 8032
Switzerland

Helmut M. Dietl

University of Zurich - Department of Business Administration (IBW) ( email )

Hottingerstrasse 10
Plattenstrasse 14
Zurich, 8032
Switzerland

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