On sabotage in collective tournaments

In this paper a tournament between teams (a collective tournament) is considered, where each contestant may spend productive effort in order to increase his team’s performance or sabotage the members of the opponent team. It is shown that each team directs all its sabotage activities at exactly one of the opponent team’s least able members. This is due to two effects, a decreasing-returns effect and a complementarity effect. The result is of particular interest, as findings on individual tournaments indicate that very able players should usually be sabotaged most strongly.     

Sabotage in dynamic tournaments

This paper studies sabotage in a dynamic tournament. Three players compete in two rounds. In the final round, a player who is leading in the race, but not yet beyond the reach of his competitors, is sabotaged more heavily. As a consequence, if all players start off at the same position, they do not work productively or sabotage at all in the first round. Thus sabotage is not only directly destructive, but also depresses incentives to work productively. If players are heterogeneous ex ante, sabotage activities in the first round may be concentrated against an underdog, contrary to findings from static tournaments.     

The Impact of Intermediate Information on Sabotage in Tournaments with Heterogeneous Contestants

Applying detailed within‐tournament information about intermediate scores and contestants' ability in rank‐order professional soccer tournaments, this study empirically analyzes the impact of interim results on the sabotage activities of heterogeneous contestants. Intermediate information that suggests that a contest is decided early decreases total sabotage. Splitting contestants into favorites and underdogs reveals that both contestants sabotage the most if intermediate information about the score compensates for or decreases ex ante heterogeneity between the teams. However, engaging in sabotage does not pay off for the contestants. Copyright © 2015 John Wiley & Sons, Ltd.     

Relative deprivation in rank-order tournaments

This paper examines the influence of relative deprivation (RD), based on net income, on the strategy choice of workers in tournaments. The results show that for given tournament prizes, workers who experience RD exert more effort than workers who maximize their expected absolute incomes. These findings hold for productive effort as well as for counterproductive effort (sabotage). In addition, the paper discusses various implications that arise when the employer can choose between different compensation schemes in the tournament.     

Sabotaging in contests with monitoring efforts

This paper considers a 3‐stage contest with both sabotage and monitoring efforts that aim to reduce sabotage. In the first stage, the regulator sets his monitoring efforts for each contestant. In the second stage, each contestant determines his sabotaging efforts, based on the monitoring efforts that were imposed by the regulator. In the third stage, each contestant determines his productive efforts in the contest. The results supply a justification to exert monitoring efforts because these efforts may benefit both the contestants and the regulator (a win‐win situation). Furthermore, the paper defines the conditions where exerting monitoring efforts would be worthwhile.     

Contests with endogenous deadlines

This paper analyzes the problem of a contest designer who chooses a starting time and a deadline of the contest to maximize discounted total effort by the contestants. Each contestant secretly decides how much effort to exert between the starting time and the deadline. At the deadline, the contestant who exerted most effort wins a prize, which consists of the endowment of the designer and collected interest. The contest has a unique Nash equilibrium. In the main model, the designer should announce the contest immediately with a short deadline to promote intense competition. I analyze how the optimal starting time and deadline change for a variable contest prize, different types of asymmetries, a Tullock lottery contest success function, and different goal functions of the designer.     

Optimal risk taking in an uneven tournament game with risk averse players

We analyze the optimal choice of risk in a two-stage tournament game between two players that have different concave utility functions. At the first stage, both players simultaneously choose risk. At the second stage, both observe overall risk and simultaneously decide on effort or investment. The results show that those two effects which mainly determine risk taking – an effort effect and a likelihood effect – are strictly interrelated. This finding sharply contrasts with existing results on risk taking in tournament games with symmetric equilibrium efforts where such linkage can never arise. Conditions are derived under which this linkage leads to a reversed likelihood effect so that the favorite (underdog) can increase his winning probability by increasing (decreasing) risk which is impossible in a completely symmetric setting.     

Optimally biased Tullock contests

This paper examines optimally biased Tullock contests. We consider a multi-player Tullock contest in which players differ in their prize valuations. The designer is allowed to impose identity-dependent treatments – i.e., multiplicative biases – to vary their relative competitiveness. The literature has been limited, because a closed-form solution to the equilibrium is in general unavailable when the number of contestants exceeds two, which nullifies the usual implicit programming approach. We develop an algorithmic technique adapted from the general approach of Fu and Wu (2020) and obtain a closed-form solution to the optimum that addresses a broad array of design objectives. We further analyze a resource allocation problem in a research tournament and adapt Fu and Wu’s (2020) approach to this noncanonical setting. Our analysis paves the way for future research in this vein.     

Characterization of the Walrasian equilibria of the assignment model

We study the assignment model where a collection of indivisible goods are sold to a set of buyers who want to buy at most one good. We characterize the extreme and interior points of the set of Walrasian equilibrium price vectors for this model. Our characterizations are in terms of demand sets of buyers. Using these characterizations, we also give a unique characterization of the minimum and the maximum Walrasian equilibrium price vectors. Also, necessary and sufficient conditions are given under which the interior of the set of Walrasian equilibrium price vectors is non-empty. Several of the results are derived by interpreting Walrasian equilibrium price vectors as potential functions of an appropriate directed graph.     

Tournament Compensation Systems,Employee Heterogeneity,and Firm Performance

Tournament compensation systems are widely used in practice and have been extensively analyzed theoretically. However, one major problem has hardly been studied in a company context so far: Although it is theoretically well understood that tournament compensation systems are only effective when employees are homogeneous, it has rarely been analyzed what companies can do when they are confronted with employee heterogeneity. In our article, we derive hypotheses on the performance effects of tournament compensation systems in a context of employee heterogeneity based on tournament and expectancy theory. Using personnel records from incentive travel contests, we are able to show that performance is lower in a situation with employee heterogeneity, but that in heterogeneous tournaments, incentives may still work for a subgroup of employees whom we term the “threshold group.” In addition, we also show how companies manage to design the information disclosure systems necessary to install effective “handicapping” or “league‐building” systems in order to increase the effort‐performance expectancy.     

“Reverse” nested lottery contests

This paper proposes a multi-prize “reverse” nested lottery contest model, which can be viewed as the “mirror image” of the conventional nested lottery contest of  Clark and Riis (1996a). The reverse-lottery contest model determines winners by selecting losers based on contestants’ one-shot effort through a hypothetical sequence of lotteries. We provide a microfoundation for the reverse-lottery contest from a perspective of (simultaneous) noisy performance ranking and establish that the model is underpinned by a unique performance evaluation rule. We further demonstrate that the noisy-ranking model can be interpreted intuitively as a “worst-shot” contest, in which contestants’ performances are evaluated based on their most severe mistakes. The reverse-lottery contest model thus depicts a great variety of widely observed competitive activities of this nature. A handy closed-form solution for a symmetric equilibrium of the reverse-lottery contest is obtained. We show that the winner-take-all principle continues to hold in reverse-lottery contests. Moreover, we find that a reverse-lottery contest elicits more effort than a conventional lottery contest whenever the prizes available to contestants are relatively scarce.     

Performance feedback in a group contest: A field experiment on electricity conservation

We conduct a field experiment on electricity conservation to study whether revealing both the competitive state and the social state in a group contest affects individual beliefs and efforts. Our experiment randomizes group composition, participation, and types of information received in the contest. We find that contestants without feedback about relative performance had difficulty assessing their group's competitive status, and laggards within a group tended to be overconfident about their relative contribution. In addition, we find that contestants receiving both competitive and social information were more likely to have correct beliefs about their positions during the contest and exerted the most effort. Meanwhile, contestants receiving no performance feedback did not behave differently from those who did not participate in the contest. Overall, contestants reduced their energy use by 10% during the contest. Our results support the notion that providing feedback is important in a group contest.     

Commitment in R&D tournaments via strategic delegation to overoptimistic managers

This paper shows that it is profitable for a firm to hire an overoptimistic manager to commit to a certain investment strategy in an R&D tournament situation. In the unique symmetric equilibrium, all firms delegate to overoptimistic managers, where the optimal degree of overoptimism depends on the riskiness of the tournament. In these situations a manager's type may serve as a substitute for delegation via contracts. By delegating to overoptimistic managers, firms can escape the rat race nature of R&D tournaments. Copyright © 2010 John Wiley & Sons, Ltd.     

Asymptotic interpretations for equilibria of nonatomic games

We show that a mixed equilibrium of a semi-anonymous nonatomic game can be used to generate pure-strategy profiles for finite games randomly generated from the type distribution of the nonatomic game. As the numbers of players involved in the finite games increase, the generated profiles will be asymptotically equilibrium. The converse of this result is also true, i.e., a mixed-strategy profile that is not an equilibrium for the nonatomic game will not be able to achieve the above asymptotic rationality for large finite games. The combined finding can be specialized to situations where the nonatomic game is anonymous and where the given equilibrium is pure. Besides their practical values, these results offer yet one more justification for the study of nonatomic games. They also suggest that efforts may be better spent on searching for mixed rather than pure equilibria of nonatomic games.     

Patents, Invalidity, and the Strategic Transmission of Enabling Information

The patent system encourages innovation and knowledge disclosure by providing exclusivity to inventors. Exclusivity is limited, however, because a substantial fraction of patents have some probability of being ruled invalid when challenged in court. The possibility of invalidity—and an ensuing market competition—suggests that when an innovator's capability (e.g., cost of production) is private information, there is potential value to an innovator from signaling strong capability via a disclosure that transfers technical knowledge to a competitor. We model a product-innovation setting in which a valid patent gives market exclusivity and find a unique signaling equilibrium. One might expect that as the probability that a patent will be invalid becomes low, greater disclosure will be induced. We do not find this expectation to be generally supported. Further, even where full disclosure arises in equilibrium, it is only the less capable who make full disclosures. The equilibrium analysis also highlights many of the novel and appealing features of enabling knowledge disclosure signals.     

The (im)possibility of ethics in the information age

This paper is concerned with the possibility that the ethical claim of the other, that sense of being bound to the other, may becoming more and more difficult to experience as information technology increasingly mediates our social being. The paper will support the supposition of Don Caputo that obligation does not emanate from codes, imperatives or moral arguments. Rather it will argue that obligation takes hold of us from within disaster. Obligation, our being bound-to, finds us when we come face to a face in disaster. The paper will argue that electronic mediation is inducing a sense of hyperreality into our world (Baudrillard). It will argue that this hyperreality is making our ethical sensibility nebulous to the point that we are not coming face to face with our obligations. An analysis of the Baring bank disaster will be used to demonstrate the point. The paper will show that Nick Leeson was in a hyperreal world in which he was not able to come face to face with the victims of the disaster. The electronic hyperreal world of financial markets, where traders deal in abstract numbers, movements on the screen, made it possible for him to look over and past the faces and proper names of the victims; their claim became diffused in the numbers on the screen, not real cash only numbers, not real people with faces and proper names, just numbers. If this supposition seems tenable what are we to do? The paper argues that we do not need more codes, imperatives or moral arguments, as such. Rather we need to keep our lives at the resolution, of faces and proper names—if obligation happens this is where it is likely to be.     

Time Discounting in Strategic Contests

In many contests, such as political campaigns or R&D expenditures, there is at least some trade‐off between immediate money outlay and potential future benefits. This timing aspect has mostly been ignored by the contest literature. If contestants exhibit a strong present bias, such as that shown by past individual choice experiments, then benefits that are deferred to the future will lead to a significant drop in investment. This paper uses controlled laboratory experiments to explore how the timing of prize payment impacts behavior in a contest with a unique Nash equilibrium strategy. We find no evidence that people significantly discount future prizes in our contests, despite the fact that we do replicate present bias in a separate individual choice experiment.     

Problem-solving effort and success in innovation contests: The role of national wealth and national culture

Innovation contests allow firms to harness specialized skills and services from globally dispersed participants for solutions to business problems. Such contests provide a rich setting for operations management (OM) scholars to explore problem solving in global labor markets as firms continue to unbundle their innovation value chains. In this study, we examine the implications of specific types of diversity in innovation contests on problem-solving effort and success. First, we conceptualize diversity among contestants in terms of national wealth (measured as gross domestic product per capita (GDPP) adjusted for purchasing power parity) and national culture (measured using the culture dimensions of performance orientation and uncertainty avoidance) and examine how such factors influence problem-solving effort. Next, we examine how differences between contestants and contest holders in terms of the above factors influence contest outcomes. Using data from a popular online innovation contest platform and country-level archival data, we find that contestants from countries with lower levels of GDPP are more likely to exert greater problem-solving effort compared to other contestants. With regard to national culture, we find that performance orientation and uncertainty avoidance have positive and negative effects, respectively, each of which weakens with increasing levels of GDPP. Finally, our analysis provides evidence of homophily effects indicating that contestants who share greater similarities with the contest holder in terms of national wealth and national culture are more likely to be successful in a contest. We discuss the implications of the study's findings for contest holders and platform owners who organize innovation contests, and for emerging research on innovation contests.     

Dissent,sabotage, and leader behaviour in contests: Evidence from European football

This paper provides an empirical investigation of misconducts in contests based on data from European football. We extend previous studies by differentiating between dissents with the referee and misconducts directly aimed at sabotaging the competitor. We find that sabotage is more likely committed by teams with lower ability. Dissent is more likely to be shown by teams lagging behind in score and by away teams. We further find that captains engage more in sabotage during important matches and challenge referees' decisions immediately after sanctions of teammates. Finally, we also observe a deterrence effect of sanctions on all types of misconduct.