Sponsor:
Philipp Denter gratefully acknowledges the
support from the Ministerio Economia y Competitividad (Spain) through grants
ECO2014-55953-P and MDM 2014-0431.
Project:
Gobierno de España. ECO2014-55953-P Gobierno de España. MDM 2014-0431
In promotion contests or other tournament-like situations, a principal may attach some value to the highest effort expended by an agent. We show that whenever agents interact over multiple periods, awarding a head start to one of them is optimal even with compIn promotion contests or other tournament-like situations, a principal may attach some value to the highest effort expended by an agent. We show that whenever agents interact over multiple periods, awarding a head start to one of them is optimal even with completely symmetric agents. Awarding a small head start increases maximum individual effort without decreasing aggregate effort. (C) 2016 Elsevier B.V. All rights reserved.[+][-]