Dynamically Sabotage-Proof Tournaments
This article explores the consequences of sabotage for the design of incentive contracts. The possibility of sabotage gives rise to a dynamic concern, similar to the Ratchet effect, which distorts the agents’ incentives. We first show that the mere possibility of sabotage may make it impossible to implement the first-best effort, and we then offer two distinct incentive schemes, fast track and late selection, to circumvent this problem. The present model offers a mechanism through which these two schemes arise in a unified framework.
Year of publication: |
2012
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Authors: | Ishida, Junichiro |
Published in: |
Journal of Labor Economics. - University of Chicago Press. - Vol. 30.2012, 3, p. 627-627
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Publisher: |
University of Chicago Press |
Saved in:
Online Resource
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