Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/93955
Authors: 
Budde, Jörg
Year of Publication: 
2007
Series/Report no.: 
SFB/TR 15 Discussion Paper 205
Abstract: 
Tournaments have been objected as resulting from ad hoc restrictions to the contracting problem which are not easily justified. Taking into account that a performance measure might not be verifiable to a third party, however, a restriction to payments which sum up to a constant may be reasonable. The paper analyzes such fixed payment schemes with regard to their optimality and the relation to the special case of tournaments. It emerges that for a group of identical risk-neutral agents, the optimal fixed payment scheme is a tournament.
Subjects: 
bonus pools
relative performance evaluation
subjective performance evaluation
tournaments
verifiability
JEL: 
D82
M52
M54
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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