Hybrid Cardinal Tournaments

Economics Bulletin, Forthcoming

10 Pages Posted: 29 Aug 2010  

Theofanis Tsoulouhas

University of California-Merced, School of Social Sciences, Humanities & Arts, The Ernest & Julio Gallo Management Program

Date Written: August 26, 2010

Abstract

This paper proposes an alternative to standard cardinal tournaments. The analysis contrasts “hybrid” cardinal tournaments to standard cardinal tournaments and piece rates. It shows that providing for partial insurance against common uncertainty via a hybrid tournament (in which the weights on absolute and group average performances are not equal) is always better for the principal than providing for full insurance against common uncertainty via a standard tournament (with equal weights), or than providing for no insurance at all via piece rates. Hybrid tournaments increase the principal's profit because the agents exert more effort in equilibrium.

Keywords: Tournaments, Contests, Piece Rates

JEL Classification: D82, D21

Suggested Citation

Tsoulouhas, Theofanis, Hybrid Cardinal Tournaments (August 26, 2010). Economics Bulletin, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1666434

Theofanis Tsoulouhas (Contact Author)

University of California-Merced, School of Social Sciences, Humanities & Arts, The Ernest & Julio Gallo Management Program ( email )

Merced, CA 95343
United States
209-228-4640 (Phone)

HOME PAGE: http://tsoulouhas.info

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