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I am trying to find one specific model from organizational economics that I encountered in one of my past classes, but I cant remember the name of the model and google scholar search based on some of the information below was not helpful, and I can't find my notes from that class either.

  • The model was model of principal agent relationship where principal cannot observe agents ability.
  • I recall that the feature of the model was that there was large pool of agents.
  • The model was about setting up some incentive structure to exert agent put optimal level of effort.
  • The outcome is supposed to be some mechanism that looks like sport competition, where you have one big prize for the 'winner(s)', but everyone else gets nothing.

I am also looking not just for the model name but also some reference that has some rigorous treatment of the model.

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    $\begingroup$ There is a large literature on "contests" which combines the ingredients above. Sometimes those are Tullock contests, sometimes contests similar to an all-pay auction. $\endgroup$
    – Bayesian
    Jul 17, 2021 at 11:59
  • $\begingroup$ @Bayesian thanks for pointers I will check it out, those terms sound vaguely familiar so I think that might be it, I will check it later, maybe consider posting it as an answer $\endgroup$
    – 1muflon1 ♦
    Jul 17, 2021 at 12:32

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This looks like a contest. There is a large economic literature on contests. Have a look at this survey by Corchón and Serena. Often these papers use a Tullock contest success function or model the contest as an all-pay auction, see, e.g., papers by Ron Siegel. There are papers that analyze given contests (research contests, lobbying, etc) and papers that look at contest design. I believe you are looking for the latter, i.e., some paper in which the contest arises as an optimal allocation mechanism maximizing the effort input of participants.

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