Information Disclosure in Multistage Tournaments

21 Pages Posted: 8 Apr 2008

See all articles by Maria Goltsman

Maria Goltsman

University of Western Ontario - Department of Economics

Arijit Mukherjee

Michigan State University

Abstract

Two agents participate in a tournament that has two stages: intermediate and final. The results of the intermediate stage are privately observed by the principal who organizes the tournament. Prizes for the winner and the loser are exogenously given, but the principal can enhance effort incentives by strategically disclosing the intermediate results. The paper characterizes the optimal disclosure policy. The policies that enhance final stage effort dampen incentives at the intermediate stage. The optimal disclosure policy balances this trade-off and has a simple form: disclosure only if both agents fail. This result suggests that the commonly discussed policies of "full disclosure" and "no disclosure" are both suboptimal.

Suggested Citation

Goltsman, Maria and Mukherjee, Arijit, Information Disclosure in Multistage Tournaments. Available at SSRN: https://ssrn.com/abstract=1117575 or http://dx.doi.org/10.2139/ssrn.1117575

Maria Goltsman

University of Western Ontario - Department of Economics ( email )

London, Ontario N6A 5B8
Canada

Arijit Mukherjee (Contact Author)

Michigan State University ( email )

Marshall Adams Hall
East Lansing, MI 48824-1122
United States

HOME PAGE: http://www.amukherjee.net