and local governments, in procurement, in rent-seeking contests and in tournaments used by HMOs. …A highly acclaimed result is that tournaments are superior to piece rates when the agents are risk averse and their … production activities are subject to a relatively large common shock. The reason is that tournaments allow the principal to trade …

This paper proposes an alternative to standard cardinal tournaments. The analysis contrasts "hybrid" cardinal … tournaments to standard cardinal tournaments and piece rates. It shows that providing for partial insurance against common … weights), or than providing for no insurance at all via piece rates. Hybrid tournaments increase the principal's profit …