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How noise affects effort in tournaments
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How noise affects effort in tournaments

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  • Drugov, Mikhail
  • Ryvkin, Dmitry

Abstract

It is commonly understood that making a tournament ranking process more noisy leads to a reduction in effort exerted by players in the tournament. But what exactly does it mean to have ``more noise?'' We address this question and show that the level of risk, as measured by the variance or the second-order stochastic dominance order, is not the answer, in general. For rank-order tournaments with arbitrary prizes, equilibrium effort decreases as noise becomes more dispersed, in the sense of the dispersive order. For winner-take-all tournaments, we identify a weaker version of the dispersive order we call quantile stochastic dominance, as well as other orders and entropy measures linking equilibrium effort and noise.

Suggested Citation

  • Drugov, Mikhail & Ryvkin, Dmitry, 2020. "How noise affects effort in tournaments," CEPR Discussion Papers 14457, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:14457
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    Cited by:

    1. Letina, Igor & Liu, Shuo & Netzer, Nick, 2023. "Optimal contest design: Tuning the heat," Journal of Economic Theory, Elsevier, vol. 213(C).
    2. Hanming Fang & Ming Li & Zenan Wu, 2022. "Tournament-Style Political Competition and Local Protectionism: Theory and Evidence from China," PIER Working Paper Archive 22-031, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    3. Thomas Giebe & Oliver Gürtler, 2024. "Player Strength and Effort in Contests," ECONtribute Discussion Papers Series 285, University of Bonn and University of Cologne, Germany.
    4. Drugov, Mikhail & Ryvkin, Dmitry, 2020. "Tournament rewards and heavy tails," Journal of Economic Theory, Elsevier, vol. 190(C).
    5. Bastani, Spencer & Giebe, Thomas & Gürtler, Oliver, 2022. "Simple equilibria in general contests," Games and Economic Behavior, Elsevier, vol. 134(C), pages 264-280.
    6. Jidong Zhou, 2020. "Improved Information in Search Markets," Cowles Foundation Discussion Papers 2264R, Cowles Foundation for Research in Economics, Yale University, revised Jun 2022.
    7. Zhu, Weichao & Wang, Lu & Lang, Youze, 2022. "The costs and benefits of tournament in a frictional labor market," Economic Modelling, Elsevier, vol. 113(C).
    8. Ryvkin, Dmitry & Drugov, Mikhail, 2020. "The shape of luck and competition in winner-take-all tournaments," Theoretical Economics, Econometric Society, vol. 15(4), November.
    9. Astrid Gamba & Luca Stanca, 2023. "Mis-judging merit: the effects of adjudication errors in contests," Experimental Economics, Springer;Economic Science Association, vol. 26(3), pages 550-587, July.
    10. Morgan, John & Tumlinson, Justin & Várdy, Felix, 2022. "The limits of meritocracy," Journal of Economic Theory, Elsevier, vol. 201(C).

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    More about this item

    Keywords

    Tournament; Noise; Dispersive order; Quantile stochastic dominance; Entropy;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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