In equilibrium play of a two-round tournament we find that underdogs exert more effort in the opening round while favorites save more effort for the final. Ability differences between players are therefore compressed in the opening round so upsets are more likely, and amplified in the final so...

School entrance examinations are both an incentive system to motivate students and a screening device to identify students with the most potential. To maximize incentives to acquire knowledge, exams should only reward achievement. But to identify the most able students, exams should also reward...