Risk-taking in subjective promotion tournaments

By:

KWON, Iloong

Material type: Text

TextSeries: Applied Economics Letters ; Volume , number ,New York Taylor & Springer 2013Content type:

text

Media type:

unmediated

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volume

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Summary: This article considers a promotion tournament where the winner is decided by the principal's posterior belief about the agents’ abilities, called a subjective promotion tournament. If the agents can choose the risk of their performance as well as their effort, this article shows that such a subjective tournament can be better than an objective tournament where the winner is decided by the agents’ verifiable performance measures only. This is because the subjective tournament leads to lower uncertainty about the agents’ abilities and a higher level of agents’ effort, thereby providing better sorting and incentive effects.

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Holdings
Item type	Current library	Call number	Vol info	Status	Notes	Date due	Barcode
Journal Article	Main Library - Special Collections	HB1.A666 APP (Browse shelf(Opens below))	Vol.20 , No.13 - 15 (Oct 2013)	Not for loan	For In House Use Only

This article considers a promotion tournament where the winner is decided by the principal's posterior belief about the agents’ abilities, called a subjective promotion tournament. If the agents can choose the risk of their performance as well as their effort, this article shows that such a subjective tournament can be better than an objective tournament where the winner is decided by the agents’ verifiable performance measures only. This is because the subjective tournament leads to lower uncertainty about the agents’ abilities and a higher level of agents’ effort, thereby providing better sorting and incentive effects.

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