Gershkov, Alex and Perry, Motty (2009) Tournaments with midterm reviews. Games and Economic Behavior, Vol.66 (No.1). pp. 162-190. doi:10.1016/j.geb.2008.04.003 ISSN 0899-8256.

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Abstract

In many tournaments investments are made over time. The question whether to conduct a review once at the end, or additionally at points midway through the tournament, is a strategic decision. If the latter course is chosen, then the designer must establish both a rule for aggregating the results of the different reviews and a rule for determining compensations.

We first study the case of a fixed, exogenously given prize and then extend the analysis to the case where the prize is not fixed but may vary with the tournament's outcome.

It is shown that (1) it is always optimal to assign a higher weight to the final review; (2) this weight increases with the dominance of the first-stage effort in determining the final review's outcome. When the prize is not fixed, the optimal design generates an asymmetric tournament in the second stage that favors the winner of the midterm review.

Item Type:	Journal Article
Divisions:	Faculty of Social Sciences > Economics
Journal or Publication Title:	Games and Economic Behavior
Publisher:	Elsevier
ISSN:	0899-8256
Official Date:	2009
Dates:	Date Event 2009 Published
Volume:	Vol.66
Number:	No.1
Page Range:	pp. 162-190
DOI:	10.1016/j.geb.2008.04.003
Status:	Peer Reviewed
Publication Status:	Published

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