TY - JOUR
T1 - Rewards versus punishments in additive, weakest-link, and best-shot contests
AU - Kamijo, Yoshio
N1 - Funding Information:
The author is grateful to Asuka Komiya, Tatsuyoshi Saijo, Kan Takeuchi, Takeshi Harui, and participants of the 2014 Economic Science Association (ESA) International Meetings and the 2014 Asia-Pacific ESA Conference for their helpful comments. In addition, the author is grateful for financial support from the Japan Society for the Promotion of Science Grant-in Aid for Exploratory Research and Grant-in-Aid for Scientific Research (B).
Publisher Copyright:
© 2015 Elsevier B.V.
PY - 2016/2/1
Y1 - 2016/2/1
N2 - In this study, we provide a theory to explain how bottom punishment or top reward enhances performance of teams when there is heterogeneity across players in cost-performance relationships. In contrast to the existing literature, we consider three types of performance functions: additive, weakest link (the performance is the min of performances of n contestants), and best shot (the performance is the max of performances of n contestants). For any of the three types, we derive easy-to-check sufficient conditions to judge whether reward or punishment is better. From the sufficient condition for the additive performance function, we know that punishment is better for less heterogeneous people and reward is better for more heterogeneous people. In addition, the sufficient conditions for the best-shot and weakest-link cases suggest that some unintuitive results hold; even under the best-shot (weakest link) performance function, the bottom punishment (top reward) becomes better when the gap in the abilities of contestants becomes very small (large).
AB - In this study, we provide a theory to explain how bottom punishment or top reward enhances performance of teams when there is heterogeneity across players in cost-performance relationships. In contrast to the existing literature, we consider three types of performance functions: additive, weakest link (the performance is the min of performances of n contestants), and best shot (the performance is the max of performances of n contestants). For any of the three types, we derive easy-to-check sufficient conditions to judge whether reward or punishment is better. From the sufficient condition for the additive performance function, we know that punishment is better for less heterogeneous people and reward is better for more heterogeneous people. In addition, the sufficient conditions for the best-shot and weakest-link cases suggest that some unintuitive results hold; even under the best-shot (weakest link) performance function, the bottom punishment (top reward) becomes better when the gap in the abilities of contestants becomes very small (large).
KW - Contest theory
KW - Heterogeneity
KW - Punishment
KW - Reward
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U2 - 10.1016/j.jebo.2015.11.013
DO - 10.1016/j.jebo.2015.11.013
M3 - Article
AN - SCOPUS:84952771129
VL - 122
SP - 17
EP - 30
JO - Journal of Economic Behavior and Organization
JF - Journal of Economic Behavior and Organization
SN - 0167-2681
ER -