Efficiency gains from organizational innovation: Comparing ordinal and cardinal tournament games in broiler contracts
نویسندگان
چکیده
We analyze the contract settlement data of a poultry company who contracts the production of broiler chickens with a group of independent growers. The company originally used rank-order (ordinal) tournaments to compensate their contract growers and later switched to cardinal tournaments. Based on the observed payment mechanism we construct an empirical model of a rank-order tournament game and estimate structural parameters of the symmetric Nash equilibrium and then simulate growers' performance under the observed cardinal tournament contract. We found that the model with risk-averse agents fits the data better than the model with risk-neutral agents and that switching from a rank-order tournament to a cardinal tournament, while keeping the growers' ex-ante expected utility constant, improved efficiency. The principal (company) gains from the switch, whereas some of the agents (growers) gain and others lose depending on their realized productivity shocks. © 2006 Elsevier B.V. All rights reserved. JEL classification: C5; D4; D8; J4; L1; L2; Q1
منابع مشابه
Ordinal versus cardinal voting rules: A mechanism design approach
We consider the performance and incentive compatibility of voting rules in a Bayesian environment with independent private values and at least three alternatives. It is shown that every (ex-ante) Pareto efficient ordinal rule among neutral rules is incentive compatible under a symmetry assumption on alternatives. Furthermore, we prove that there exists an incentive compatible cardinal rule whic...
متن کاملEvolutionary Tournament-Based Comparison of Learning and Non-Learning Algorithms for Iterated Games
Evolutionary tournaments have been used effectively as a tool for comparing game-playing algorithms. For instance, in the late 1970's, Axelrod organized tournaments to compare algorithms for playing the iterated prisoner's dilemma (PD) game. These tournaments capture the dynamics in a population of agents that periodically adopt relatively successful algorithms in the environment. While these t...
متن کاملOrdinal Games
We study strategic games where players' preferences are weak orders which need not admit utility representations. First of all, we extend Voorneveld's concept of best-response potential from cardinal to ordinal games and derive the analogue of his characterization result: An ordinal game is a best-response potential game if and only if it does not have a best-response cycle. The characterizatio...
متن کاملEvolutionary Tournament-Based Comparison of Learning and Non-Learning Strategies for Iterated Games
Evolutionary tournaments have been used as a tool for comparing strategies. For instance, in the late 1970’s, Axelrod organized tournaments to compare strategies for playing the iterated prisoner’s dilemma (PD) game. While these tournaments and later research have provided us with a better understanding of successful strategies for iterated PD, our understanding is less clear about strategies f...
متن کاملOrdinal and cardinal solution concepts for two-sided matching
We characterize solutions for two-sided matching, both in the transferableand in the nontransferable-utility frameworks, using a cardinal formulation. Our approach makes the comparison of the matching models with and without transfers particularly transparent. We introduce the concept of a no-trade matching to study the role of transfers in matching. A no-trade matching is one in which the avai...
متن کامل