THE OPTIMAL ALLOCATION OF PRIZES IN TOURNAMENTS OF HETEROGENEOUS AGENTS

Tournaments are widely used in organizations, explicitly or implicitly, to reward the best‐performing employees, for example, by promotion or bonuses, and/or to penalize the worst‐performing employees, for example, by demotion, withholding bonuses, or unfavorable job assignments. These incentive schemes can be interpreted as various prize allocations based on the employees' relative performance. While the optimal prize allocation in tournaments of symmetric agents is relatively well understood, little is known about the impact of the allocation of prizes on the effectiveness of tournament incentive schemes for heterogeneous agents. We show that while multiple prize allocation rules are equivalent when agents are symmetric in their ability, the equivalence is broken in the presence of heterogeneity. Under a wide range of conditions, loser‐prize tournaments, that is, tournaments that award a low prize to relatively few bottom performers, are optimal for the firm. The reason is that low‐ability agents are discouraged less in such tournaments, as compared to winner‐prize tournaments awarding a high prize to few top performers, and hence can be compensated less to meet their participation constraints. (JEL M52, J33, J24)     

Efficiency Wages,Unemployment Benefits and Union—Firm Wage Bargaining: The Issue of the Choice of the Outside Option

This paper points out that there may be a logical consistency issue in choosing the reference wage in efficiency wage models. We have shown that defining the outside option in the efficiency wage logic as the market-clearing wage solves this difficulty, and is justifiable in terms of the assumed behaviour of workers and employers. The model that we examine confirms earlier findings of reinforcing effects between union-firm bargaining and efficiency wages. However, if union preferences vary between wages and employment, Summers’ reinforcing effect is no longer present for each value of the parameter describing these preferences. Above a certain threshold value of union preferences for employment, the two mechanisms do not reinforce each other anymore.     

The Flipside of Sixpence: Aboriginal Stories of Hope and Reconciliation

This is Colleen Brown's last interview before her untimely death in 2002. The interview continues and extends Colleen's project to educate family therapists about Aboriginal experience and culture. In presenting Cecily's life narrative and painting, Colleen surprises us with a creative message of hope and reconciliation about the stolen generation, because Cecily expresses gratitude to the white family who brought her up. In her own words, Cecily ‘did that painting for me like the others so I could show family therapists what the other side of the coin is, the flipside’. This three‐way conversation between Colleen, Cecily and Glenn provides a contribution to the reconciliation process.     

Recent Changes in Metropolitan-Nonmetropolitan Migration Streams1

Abstract In this paper, we examine the demographic and socioeconomic characteristics of migration streams between metropolitan and nonmetropolitan areas for four different years over the period 1975–1993. During this period, there have been three shifts in the direction of net metro-nonmetro migration. Through nonmetro net in-migration, the “nonmetropolitan turnaround” of the 1970s reversed historical patterns of nonmetro loss of human resources, with gains and increased retention of the young and better-educated. The 1980s, however, again saw net-migration loss, including large shifts from gain to loss, especially among the young and better-educated and for workers in white collar occupations. In the 1990s, the overall pattern is again one of nonmetro net-migration gain or reduced loss, with the greatest increases among those higher status groups which experienced the greatest declines during the 1980s. The latest pattern is due largely to increased population retention, whereas previous research has shown the migration turnaround of the 1970s was due about equally to increasing retention and in-migration.     

Chronic strain, daily work stress and pain among workers with rheumatoid arthritis: Does job stress make a bad day worse?

The structure of the job and the daily experience of work are challenges for workers with rheumatoid arthritis. Yet little is known about how these two factors interact to put workers with chronic pain at risk for worse pain on a given day. This exploratory 20 workday diary study of 27 workers with rheumatoid arthritis used hierarchical linear modelling to examine how the structure of the job and neuroticism moderate the relationship between daily undesirable work events (daily stressors), and pain reports within a day. On days with more undesirable work events compared to days with fewer events, individuals with jobs associated with job 'strain' (high demand/low control) reported greater midday pain, irrespective of neuroticism and negative mood, than workers with other combinations of demand and control. These findings demonstrate the utility of analysing fluctuating within-person relationships among pain, mood and daily work stressors within the context of the structure of the job, and helps to explain why daily work stressors result in worse health outcomes for some but not all workers with RA.     

Good randomized sequential probability forecasting is always possible

Summary.  Building on the game theoretic framework for probability, we show that it is possible, using randomization, to make sequential probability forecasts that will pass any given battery of statistical tests. This result, an easy consequence of von Neumann's minimax theorem, simplifies and generalizes work by earlier researchers.     

An asymptotic approach to progressive censoring

Progressive Type-II censoring was introduced by Cohen (Technometrics 5(1963) 327) and has been the topic of much research. The question stands whether it is sensible to use this sampling plan by design, instead of regular Type-II right censoring. We introduce an asymptotic progressive censoring model, and find optimal censoring schemes for location-scale families. Our optimality criterion is the determinant of the 2×2 covariance matrix of the asymptotic best linear unbiased estimators. We present an explicit expression for this criterion, and conditions for its boundedness. By means of numerical optimization, we determine optimal censoring schemes for the extreme value, the Weibull and the normal distributions. In many situations, it is shown that these progressive schemes significantly improve upon regular Type-II right censoring.