An alternative interpretation of random noise in rank-order tournaments

- We define a variant of the canonical model of contests in Lazear and Rosen (1981).
- This variant proposes an alternative interpretation of the random additive noise.
- Players observe their final outputs at the time when they choose the inputs.
- This allows employing the model in situations where outputs are observed.

We propose an alternative interpretation of additive random noise from the canonical framework of Lazear and Rosen (1981) amenable to applications where players do observe their final outputs at the time when inputs are chosen. This interpretation is suitable to model situations where participants do not know the precise distribution of the population from which their opponents are drawn. The variant of the model that we define is strategically equivalent to that in Lazear and Rosen (1981).