Information Feedback in a Dynamic Tournament
43 Pages Posted: 16 Jul 2003
Date Written: May 2003
Abstract
This paper studies the problem of information revelation in a multi-stage tournament where the agents' effort in each stage gives rise to a stochastic performance signal privately observed by the principal. The principal controls the agents' effort incentive through the use of a a feedback policy, which transforms his private information into a public announcement. The optimal feedback policy is one that maximizes the agents' expected effort. The paper identifies when the principal should use the no-feedback policy that reveals no information, or the full-feedback policy that reveals all his information.
Keywords: tournament, mechanism, information revelation, Jensen's inequality
JEL Classification: C72, D82
Suggested Citation: Suggested Citation
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