Carrots and sticks: Prizes and punishments in contests

Benny Moldovanu; Aner Sela; Xianwen Shi

doi:10.1111/j.1465-7295.2010.00322.x

Carrots and sticks: Prizes and punishments in contests

Benny Moldovanu, Aner Sela, Xianwen Shi

Department of Economics

Research output: Contribution to journal › Article › peer-review

38 Scopus citations

Abstract

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 language	English
Pages (from-to)	453-462
Number of pages	10
Journal	Economic Inquiry
Volume	50
Issue number	2
DOIs	https://doi.org/10.1111/j.1465-7295.2010.00322.x
State	Published - 1 Apr 2012

ASJC Scopus subject areas

Business, Management and Accounting (all)
Economics and Econometrics

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10.1111/j.1465-7295.2010.00322.x

Cite this

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Carrots and sticks: Prizes and punishments in contests

Abstract

ASJC Scopus subject areas

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