Multiple prizes in tournaments with career concerns
Articles
Overview
published in
- JOURNAL OF ECONOMIC THEORY Journal
publication date
- January 2024
volume
- 215
Digital Object Identifier (DOI)
International Standard Serial Number (ISSN)
- 0022-0531
Electronic International Standard Serial Number (EISSN)
- 1095-7235
abstract
- We introduce career concerns into rank-order tournaments and offer a novel explanation for the pervasiveness of multiple prizes. We argue that career-concerned individuals, already facing market pressure to perform, will be reluctant to participate in winner-take-all competitions. To entice them and maximize performance, the organizer promises a softer competition through multiple prizes. We show that the minimum number of prizes is single-peaked in the population's talent variance and increasing in publicly disclosed ranks. We also examine entry fees, talent pre-screening, and prize budget as design tools for tournaments, along with prize allocation.
Classification
keywords
- career concerns; contests; normal order statistic; ranking; tournaments