An American church sends 10 missionaries to Panama for three years to find new converts.

Every six months, the missionary with the most new converts gets to be the supervising missionary for the next six months. This basically means that he or she gets to drive a car, while the other 9 have to walk or ride bicycles.

Clearly, this is a tournament. Now consider the following two cases. For which case will the church’s incentive plan work best? (Hint: Think about ability risk vs. environment risk.)

Case 1: Missionaries specialize in different regions: Some stay in rich neighborhoods for the whole six months, others stay in poor neighborhoods for the whole six months.

Case 2: Missionaries move from region to region every few weeks, so that all missionaries spend a little time in every kind of Panamanian neighborhood. hu6