The incentive effect of coarsening the competition structure in a tournament

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

The incentive effect of coarsening the competition structure in a tournament is studied. By coarsening the competition structure, we mean that coarser performance measure is used while finer information is available. Examples include letter grades or grade classes when finer numeric grades are available. Coarsening the competition structure has two countervailing incentive effects. While it reduces the likelihood that marginal effort changes the result, the reward change will be bigger once the result is changed. We provide a sufficient condition on the performance distribution for the reduction of work incentive by coarsening; log-concavity of the density.

Original languageEnglish
Pages (from-to)411-414
Number of pages4
JournalEconomics Letters
Volume125
Issue number3
DOIs
Publication statusPublished - 2014 Dec 1

Fingerprint

Incentive effect
Tournament
Work incentives
Countervailing incentives
Performance measures
Reward
Log-concavity
Marginal likelihood

Keywords

  • Coarsening
  • Incentive effect
  • Log-concave density
  • Tournament

ASJC Scopus subject areas

  • Economics and Econometrics
  • Finance

Cite this

The incentive effect of coarsening the competition structure in a tournament. / Lee, Sam-Ho.

In: Economics Letters, Vol. 125, No. 3, 01.12.2014, p. 411-414.

Research output: Contribution to journalArticle

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