THE OPTIMAL ALLOCATION OF PRIZES IN TOURNAMENTS OF HETEROGENEOUS AGENTS.
Tournaments are widely used in organizations, explicitly or implicitly, to reward the best-performing employees, for example, by promotion or bonuses, and/or to penalize the worst-performing employees, for example, by demotion, withholding bonuses, or unfavorable job assignments. These incentive sch...
| Publicado en: | Economic Inquiry Vol. 55; no. 1; pp. 461 - 479 |
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| Autores principales: | , , , |
| Formato: | Artículo |
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Wiley-Blackwell
Jan2017
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| Materias: | |
| Acceso en línea: | Ver este registro en EBSCOhost |
| fields | @attributes: recordID: 1 pdfLink: plink: https://search.ebscohost.com/login.aspx?direct=true&db=ssf&AN=119533463&site=ehost-live header: @attributes: shortDbName: ssf uiTerm: 119533463 longDbName: Social Sciences Full Text (H.W. Wilson) uiTag: AN controlInfo: bkinfo: jinfo: jid: 00952583 EIQ jtl: Economic Inquiry issn: 00952583 maglogo: Y pubinfo: dt: Jan2017 vid: 55 iid: 1 pid: 480 pub: Wiley-Blackwell artinfo: ui: 119533463 10.1111/ecin.12380 ppf: 461 ppct: 18 formats: fmt: – @attributes: type: T – @attributes: type: P size: 450KB tig: atl: THE OPTIMAL ALLOCATION OF PRIZES IN TOURNAMENTS OF HETEROGENEOUS AGENTS. aug: au: Balafoutas, Loukas Dutcher, E. Glenn Lindner, Florian Ryvkin, Dmitry affil: Professor, Department of Public Finance, University of Innsbruck, Innsbruck Austria Assistant Professor, Department of Economics, Ohio University, Athens OH 45701 Assistant Professor, Department of Banking and Finance, University of Innsbruck, Innsbruck Austria Assistant Professor, Department of Economics, Florida State University, Tallahassee FL 32306 su: Labor incentives Employee reviews Performance evaluation Tournaments Economic research sug: subj: Research and Development in the Social Sciences and Humanities Labor incentives Employee reviews Performance evaluation Tournaments Economic research ab: Tournaments are widely used in organizations, explicitly or implicitly, to reward the best-performing employees, for example, by promotion or bonuses, and/or to penalize the worst-performing employees, for example, by demotion, withholding bonuses, or unfavorable job assignments. These incentive schemes can be interpreted as various prize allocations based on the employees' relative performance. While the optimal prize allocation in tournaments of symmetric agents is relatively well understood, little is known about the impact of the allocation of prizes on the effectiveness of tournament incentive schemes for heterogeneous agents. We show that while multiple prize allocation rules are equivalent when agents are symmetric in their ability, the equivalence is broken in the presence of heterogeneity. Under a wide range of conditions, loser-prize tournaments, that is, tournaments that award a low prize to relatively few bottom performers, are optimal for the firm. The reason is that low-ability agents are discouraged less in such tournaments, as compared to winner-prize tournaments awarding a high prize to few top performers, and hence can be compensated less to meet their participation constraints. ( JEL M52, J33, J24) pubtype: Academic Journal doctype: Article src: R language: English refInfo: copyright: @attributes: flag: N holdings: @attributes: islocal: N |
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