A Primer on Cardinal Versus Ordinal Tournaments

12 Pages Posted: 7 Feb 2015

See all articles by Theofanis Tsoulouhas

Theofanis Tsoulouhas

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

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Date Written: April 2015

Abstract

This paper fills in a gap in the tournament literature by developing a framework that can be used to analyze both cardinal and ordinal tournaments, as well as piece rates. The analysis aims to obtain a Pareto ranking of cardinal versus ordinal tournaments, which is an open question in the literature. The analysis shows that, surprisingly, cardinal tournaments are superior to ordinal tournaments. The rationale is that, by utilizing all the available information more efficiently, cardinal tournaments allow the principal to implement higher power incentives, which makes them superior even though they restrict the form of the contract more than ordinal tournaments.

JEL Classification: D82, D21

Suggested Citation

Tsoulouhas, Theofanis, A Primer on Cardinal Versus Ordinal Tournaments (April 2015). Economic Inquiry, Vol. 53, Issue 2, pp. 1224-1235, 2015, Available at SSRN: https://ssrn.com/abstract=2561672 or http://dx.doi.org/10.1111/ecin.12168

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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