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Dynamic Incentives and Agent Discrimination in Broiler Production Tournaments
Author(s) -
Leegomonchai Porametr,
Vukina Tomislav
Publication year - 2005
Publication title -
journal of economics and management strategy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.672
H-Index - 68
eISSN - 1530-9134
pISSN - 1058-6407
DOI - 10.1111/j.1530-9134.2005.00085.x
Subject(s) - incentive , production (economics) , ratchet effect , quality (philosophy) , broiler , ratchet , test (biology) , business , microeconomics , industrial organization , economics , biology , management , food science , paleontology , philosophy , epistemology , chaotic
The objective of this paper is to test whether broiler processors, after observing their contract growers' abilities in the sequences of repeated short‐term contracts, strategically allocate production inputs of varying quality. The strategy can either consist of providing high‐ability agents with high‐quality inputs or providing low‐ability agents with high‐quality inputs. The first strategy would stimulate the career concerns type of response on the part of the growers, whereas the second strategy would generate a ratchet effect. We test these hypotheses by using the broiler contract production data. The results show no significant input discrimination based on grower abilities that would lead to either career concerns or ratchet effect type of dynamic incentives.