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Heterogeneous Contests and Less Informative Signals

Heterogeneous Contests and Less Informative Signals Abstract We consider rank-order contests with heterogeneous agents in which the principal is restricted to using a fair contest (or a symmetric contest), focusing on the optimal accuracy of output signals. As opposed to the absolute performance evaluation, we show that it is optimal for the principal to deliberately make the signals noisier according to the degree of heterogeneity. Some economic interpretations of controlling noise are discussed. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Japanese Economic Review Springer Journals

Heterogeneous Contests and Less Informative Signals

Kono, Hisaki; Yagi, Nobuyuki
The Japanese Economic Review , Volume 59 (1): 14 – Mar 1, 2008
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References (14)

Publisher
Springer Journals
Copyright
2007 Japanese Economic Association
ISSN
1352-4739
eISSN
1468-5876
DOI
10.1111/j.1468-5876.2007.00385.x
Publisher site
See Article on Publisher Site

Abstract

Abstract We consider rank-order contests with heterogeneous agents in which the principal is restricted to using a fair contest (or a symmetric contest), focusing on the optimal accuracy of output signals. As opposed to the absolute performance evaluation, we show that it is optimal for the principal to deliberately make the signals noisier according to the degree of heterogeneity. Some economic interpretations of controlling noise are discussed.

Journal

The Japanese Economic Review – Springer Journals

Published: Mar 1, 2008

Keywords: economics, general; microeconomics; macroeconomics/monetary economics//financial economics; econometrics; development economics; economic history

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