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A Comparison of Tournaments and Contracts

Green, Jerry; Stokey, Nancy L. - 2021

Tournaments, reward structures based on rank order, are compared with individual contracts in a model with one risk-neutral principal and many risk-averse agents. Each agents' output is a stochastic function of his effort level plus an additive shock term that is common to all the agents. The...

Persistent link: https://www.econbiz.de/10013232756

Optimal Inequality/Optimal Incentives : Evidence from a Tournament

Freeman, Richard B. - 2009

This paper examines performance in a tournament setting with different levels of inequality in rewards and different provision of information about individual's skill at the task prior to the tournament. We find that that total tournament output depends on inequality according to an inverse U...

Persistent link: https://www.econbiz.de/10012767237

Favoritism in Organizations

Prendergast, Canice - 2010

Performance evaluations for workers are typically subjective impressions held by supervisors rather than easily quantifiable measures of output. We argue that perhaps the most important aspect this is that it gives supervisors the opportunity to exercise their personal preference towards their...

Persistent link: https://www.econbiz.de/10013139327

Commitment vs. Flexibility with Costly Verification

Halac, Marina - 2016

We introduce costly verification into a general delegation framework. A principal faces an agent who is better informed about the efficient action but biased towards higher actions. An audit verifies the agent's information, but is costly. The principal chooses a permissible action set as a...

Persistent link: https://www.econbiz.de/10012977283

Supervisors and Performance Management Systems

Frederiksen, Anders - 2017

We study how heterogeneity in performance evaluations across supervisors affects employee and supervisor careers and firm outcomes using data on the performance system of a Scandinavian service sector firm. We show that supervisors vary widely in how they rate subordinates of similar quality. To...

Persistent link: https://www.econbiz.de/10012957380

A Game Theoretic Foundation of Competitive Equilibria with Adverse Selection

Netzer, Nick - 2012

We construct a fully specified extensive form game that captures competitive markets with adverse selection. In particular, it allows firms to offer any finite set of contracts, so that cross-subsidization is not ruled out. Moreover, firms can withdraw from the market after initial contract...

Persistent link: https://www.econbiz.de/10013099130

Belief Flipping in a Dynamic Model of Statistical Discrimination

Fryer, Roland G. <Jr.> - 2022

The literature on statistical discrimination shows that ex-ante identical groups may be differentially treated in discriminatory equilibria. This paper constructs a dynamic model of statistical discrimination and explores what happens to the individuals who nonetheless overcome the initial...

Persistent link: https://www.econbiz.de/10013324626

Pay for Percentile

Barlevy, Gadi - 2011

We analyze an incentive pay scheme for educators that links educator compensation to the ranks of their students within appropriately defined comparison sets, and we show that under certain conditions this scheme induces teachers to allocate socially optimal levels of effort to all students....

Persistent link: https://www.econbiz.de/10013122652

On the Role of Group Size in Tournaments : Theory and Evidence from Lab and Field Experiments

List, John A. - 2014

. We begin with a theoretical exploration of optimal contest design, focusing on the number of competitors. Our theory … test of the theory implements a laboratory experiment, where important features of the theory can be exogenously imposed … models to inform us of the relevant theoretical predictions. In both cases we find that the theory has a fair amount of …

Persistent link: https://www.econbiz.de/10013056205

Crowdsourcing City Government : Using Tournaments to Improve Inspection Accuracy

Glaeser, Edward L. - 2016

Can open tournaments improve the quality of city services? The proliferation of big data makes it possible to use predictive analytics to better target services like hygiene inspections, but city governments rarely have the in-house talent needed for developing prediction algorithms. Cities...

Persistent link: https://www.econbiz.de/10012995969