Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/253495 
Year of Publication: 
2020
Citation: 
[Journal:] Theoretical Economics [ISSN:] 1555-7561 [Volume:] 15 [Issue:] 4 [Publisher:] The Econometric Society [Place:] New Haven, CT [Year:] 2020 [Pages:] 1587-1626
Publisher: 
The Econometric Society, New Haven, CT
Abstract: 
In winner-take-all tournaments, agents' performance is determined jointly by effort and luck, and the top performer is rewarded. We study the impact of the ''shape of luck'' -- the details of the distribution of performance shocks -- on incentives in such settings. We are concerned with the effects of increasing the number of competitors, which can be deterministic or stochastic, on individual and aggregate effort. We show that these effects are determined by the shape of the density and failure (hazard) rate of the distribution of shocks. When shocks have heavy tails, aggregate effort can decrease in the number of competitors.
Subjects: 
Tournament
competition
heavy tails
stochastic number of players
unimodality
log supermodularity
failure rate
JEL: 
C72
D72
D82
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc Logo
Document Type: 
Article

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