Header

UZH-Logo

Maintenance Infos

An envelope approach to tournament design


Ewerhart, Christian (2015). An envelope approach to tournament design. Working paper series / Department of Economics 184, University of Zurich.

Abstract

Optimal rank-order tournaments have traditionally been studied using a first-order approach. The present analysis relies instead on the construction of an "upper envelope" over all incentive compatibility conditions. lt turns out that the first-order approach is not innocuous. For example, in contrast to the traditional understanding, tournaments may be dominated by piece rates even if workers are risk-neutral. The paper also offers a strikingly simple characterization of the optimal tournament for quadratic costs and CARA utility, as well as an extension to large tournaments.

Abstract

Optimal rank-order tournaments have traditionally been studied using a first-order approach. The present analysis relies instead on the construction of an "upper envelope" over all incentive compatibility conditions. lt turns out that the first-order approach is not innocuous. For example, in contrast to the traditional understanding, tournaments may be dominated by piece rates even if workers are risk-neutral. The paper also offers a strikingly simple characterization of the optimal tournament for quadratic costs and CARA utility, as well as an extension to large tournaments.

Statistics

Downloads

10 downloads since deposited on 06 Jan 2015
1 download since 12 months
Detailed statistics

Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Working Paper Series > Department of Economics
Dewey Decimal Classification:330 Economics
JEL Classification:C62, D86, L23
Uncontrolled Keywords:Rank-order tournaments, first-order approach, envelope theorem
Language:English
Date:October 2015
Deposited On:06 Jan 2015 15:34
Last Modified:15 Aug 2017 21:28
Series Name:Working paper series / Department of Economics
Number of Pages:32
ISSN:1664-7041
Additional Information:Revised version
Official URL:http://www.econ.uzh.ch/static/wp/econwp184.pdf
Related URLs:http://www.econ.uzh.ch/static/workingpapers-new.php
http://www.zora.uzh.ch/115858/

Download

Preview Icon on Download
Filetype: PDF (Version December 2014) - Registered users only
Size: 181kB
Preview Icon on Download
Preview
Filetype: PDF (Revised version October 2015)
Size: 227kB

TrendTerms

TrendTerms displays relevant terms of the abstract of this publication and related documents on a map. The terms and their relations were extracted from ZORA using word statistics. Their timelines are taken from ZORA as well. The bubble size of a term is proportional to the number of documents where the term occurs. Red, orange, yellow and green colors are used for terms that occur in the current document; red indicates high interlinkedness of a term with other terms, orange, yellow and green decreasing interlinkedness. Blue is used for terms that have a relation with the terms in this document, but occur in other documents.
You can navigate and zoom the map. Mouse-hovering a term displays its timeline, clicking it yields the associated documents.

Author Collaborations