An incumbent employee competes against a new hire for bonus or promotion. The incumbent's ability is commonly known, while that of the new hire is private information. The incumbent is subject to a perceptional bias: His prior about the new hire's type differs from the true underlying...

An incumbent employee competes against a new hire for bonus or promotion. The incumbent's ability is commonly known, while that of the new hire is private information.The incumbent is subject to a perceptional bias: His prior about the new hire's type differs from the true underlying...

An incumbent employee competes against a new hire for bonus or promotion. The incumbent’s ability is commonly known, while that of the new hire is private information. The incumbent is subject to a perceptional bias: His prior about the new hire’s type differs from the true underlying...

An incumbent employee competes against a new hire for bonus or promotion. The incumbent’s ability is commonly known, while that of the new hire is private information. The incumbent is subject to a perceptional bias: His prior about the new hire’s type differs from the true underlying...

This paper investigates the optimal formation of teams in a tournament. A manager sorts four workers---who differ in their productivity---into two teams. Workers on each team join forces to produce team output, and one team wins a prize; e.g., a bonus package. Two sorting patterns are possible:...