Citation

Discussion Paper Details

Please find the details for DP8016 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Splitting Tournaments

Author(s): Edwin Leuven, Hessel Oosterbeek and Bas van der Klaauw

Publication Date: September 2010

Keyword(s): heterogenous agents, self-selection, social planner and tournament

Programme Area(s): Labour Economics

Abstract: In this paper we investigate how heterogeneous agents choose among tournaments with different prizes. We show that if the number of agents is sufficiently small, multiple equilibria can arise. Depending on how the prize money is split over the tournaments, these may include, for example, a perfect-sorting equilibrium in which high-ability agents compete in the high-prize tournament, while low-ability agents compete for the low prize. However, there are also equilibria in which agents follow a mixed strategy and there can be reverse sorting, i.e. low-ability agents are in the tournament with the high prize, while high-ability agents are in the low-prize tournament. We show that total effort always decreases compared to a single tournament. However, splitting the tournament may increase the effort of low-ability agents.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=8016

Bibliographic Reference

Leuven, E, Oosterbeek, H and van der Klaauw, B. 2010. 'Splitting Tournaments'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=8016