Allocation of prizes in contests with participation constraints

Reut Megidish, Aner Sela

Research output: Contribution to journalArticlepeer-review

5 Scopus citations

Abstract

We study all-pay contests with an exogenous minimal effort constraint where a player can participate in a contest only if his effort (output) is equal to or higher than the minimal effort constraint. Contestants are privately informed about a parameter (ability) that affects their cost of effort. The designer decides about the size and number of prizes. We analyze the optimal prize allocation for the contest designer who wishes to maximize either the total effort or the highest effort. It is shown that if the minimal effort constraint is relatively high, the winner-take-all contest in which the contestant with the highest effort wins the entire prize sum does not maximize the expected total effort or the expected highest effort.

Original languageEnglish
Pages (from-to)713-727
Number of pages15
JournalJournal of Economics and Management Strategy
Volume22
Issue number4
DOIs
StatePublished - 1 Dec 2013

ASJC Scopus subject areas

  • General Business, Management and Accounting
  • Economics and Econometrics
  • Strategy and Management
  • Management of Technology and Innovation

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