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Divide and Conquer

Author

Listed:
  • Zhijun Chen

    (GREMAQ Toulouse universite 1)

Abstract

Tournaments are well known to be vulnerable to collusion as shown by the impossibility theorem in Ishiguro (2004), which asserts that efficient effort levels are impossible to be implemented through a collusion-proof contract. However, we argue that this impossibility is a product of simple mechanisms that prevail in collusion-proof mechanism design. In this paper, we explore more sophisticated mechanisms with discrimination and asymmetric information to prevent collusion, outlining the principle of “divide and conquer”. As a result, we establish a possibility theorem of implementing efficient effort levels, and thus break down the impossibility theorem in Ishiguro (2004).

Suggested Citation

  • Zhijun Chen, 2005. "Divide and Conquer," Labor and Demography 0504012, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpla:0504012
    Note: Type of Document - pdf; pages: 21
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/lab/papers/0504/0504012.pdf
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    Cited by:

    1. Chen, Zhijun, 2006. "Fighting Collusion in Tournaments," MPRA Paper 872, University Library of Munich, Germany.

    More about this item

    Keywords

    Collusion; Discrimination; Moral Hazard; Tournament Model;
    All these keywords.

    JEL classification:

    • D20 - Microeconomics - - Production and Organizations - - - General
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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