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Splitting Leagues

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  • Matthias Kräkel

Abstract

Splitting leagues or tournaments seems to be puzzling when agents are homogeneous and splitting leads to a negative competition effect. However, it can be shown that the principal can nevertheless benefit from splitting. First, splitting can be used as a divide-and-rule strategy by the principal to create additional incentives when collusion among the agents is possible. Second, splitting leagues gives the principal the opportunity to introduce promotions and relegations between nested tournaments (i.e., tournaments that are intertemporally linked), which also enhances incentives.
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Suggested Citation

  • Matthias Kräkel, 2006. "Splitting Leagues," Journal of Economics, Springer, vol. 88(1), pages 21-48, June.
    • Handle: RePEc:kap:jeczfn:v:88:y:2006:i:1:p:21-48
    DOI: 10.1007/s00712-006-0184-8
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    Cited by:

    1. Roman M. Sheremeta, 2011. "Contest Design: An Experimental Investigation," Economic Inquiry, Western Economic Association International, vol. 49(2), pages 573-590, April.
    2. Evan Osborne, 2008. "Rivalries," Working Papers 0808, International Association of Sports Economists;North American Association of Sports Economists.
    3. Sheremeta, Roman, 2009. "Essays on Experimental Investigation of Lottery Contests," MPRA Paper 49888, University Library of Munich, Germany.

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    More about this item

    Keywords

    collusion; leagues; promotion; relegation; tournaments; J3; J4; M5;
    All these keywords.

    JEL classification:

    • M5 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics
    • J4 - Labor and Demographic Economics - - Particular Labor Markets
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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