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Title:Incentives vs. selection in promotion tournaments: Can a designer kill two birds with one stone? PDF Logo
Authors:Höchtl, Wolfgang
Kerschbamer, Rudolf
Stracke, Rudi
Sunde, Uwe
Issue Date:2011
Series/Report no.:Discussion paper series // Forschungsinstitut zur Zukunft der Arbeit 5755
Abstract:This paper studies the performance of promotion tournaments with heterogeneous participants in two dimensions: incentive provision and selection. Our theoretical analysis reveals a trade-off for the tournament designer between the two goals: While total effort is maximized if less heterogeneous participants compete against each other early in the tournament, letting more heterogeneous participants compete early increases the accuracy in selection. Experimental evidence supports our theoretical findings, indicating that the optimal design of promotion tournaments crucially depends on the objectives of the tournament designer. These findings have important implications for the optimal design of promotion tournaments in organizations.
Subjects:promotion tournaments
heterogeneity
incentive provision
selection
JEL:M52
J33
Persistent Identifier of the first edition:urn:nbn:de:101:1-201106202087
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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