Carrots and sticks: Prizes and punishments in contests

Benny Moldovanu, Aner Sela, Xianwen Shi

Research output: Contribution to journalArticlepeer-review

45 Scopus citations


We study optimal contest design in situations where the designer can reward high performance agents with positive prizes and punish low performance agents with negative prizes. We link the optimal prize structure to the curvature of distribution of abilities in the population. In particular, we identify conditions under which, even if punishment is costly, punishing the bottom is more effective than rewarding the top in eliciting effort input. If punishment is costless, we study the optimal number of punishments in the contest.

Original languageEnglish
Pages (from-to)453-462
Number of pages10
JournalEconomic Inquiry
Issue number2
StatePublished - 1 Apr 2012

ASJC Scopus subject areas

  • General Business, Management and Accounting
  • Economics and Econometrics


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