The incentive effect of coarsening the competition structure in a tournament

Sam Ho Lee

doi:10.1016/j.econlet.2014.09.028

The incentive effect of coarsening the competition structure in a tournament

Sam Ho Lee

Research output: Contribution to journal › Article › peer-review

5 Citations (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 language	English
Pages (from-to)	411-414
Number of pages	4
Journal	Economics Letters
Volume	125
Issue number	3
DOIs	https://doi.org/10.1016/j.econlet.2014.09.028
Publication status	Published - 2014 Dec 1

Bibliographical note

Funding Information:
The author acknowledges support from the Korean National Research Foundation ( 2014S1A5A8017336 ).

Publisher Copyright:
© 2014 Elsevier B.V.

Copyright:
Copyright 2020 Elsevier B.V., All rights reserved.

Keywords

Coarsening
Incentive effect
Log-concave density
Tournament

ASJC Scopus subject areas

Finance
Economics and Econometrics

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10.1016/j.econlet.2014.09.028

Cite this

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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.",

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N2 - 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.

AB - 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.

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KW - Log-concave density

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The incentive effect of coarsening the competition structure in a tournament

Abstract

Bibliographical note

Keywords

ASJC Scopus subject areas

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