Publication Type
Journal Article
Version
acceptedVersion
Publication Date
10-2007
Abstract
This paper compares relative performance evaluation via tournaments to absolute performance evaluation via piece rates when agents are heterogeneous ex post, to make the point that agent heterogeneity compromises the insurance function of tournaments. In particular, we show that the more heterogeneous agents are the less insurance can be offered through tournaments and the less dominant tournaments are over piece rates. Thus, absolute performance piece rates should be preferred when agents are highly heterogeneous. However, even with heterogeneous agents, tournaments become more desirable when the number of agents or the uncertainty about the common shock increases sufficiently.
Discipline
Economic Theory
Research Areas
Economic Theory
Publication
Economics Bulletin
Volume
4
Issue
41
First Page
1
Last Page
9
ISSN
1545-2921
Publisher
Economics Bulletin
Citation
TSOULOUHAS, Theofanis and MARINAKIS, Kosmas.
Tournaments with ex post heterogeneous agents. (2007). Economics Bulletin. 4, (41), 1-9.
Available at: https://ink.library.smu.edu.sg/soe_research/2346
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.