Carrots and sticks: Prizes and punishments in contests

Benny Moldovanu, Aner Sela, Xianwen Shi

Research output: Contribution to journalArticlepeer-review

36 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 languageEnglish
Pages (from-to)453-462
Number of pages10
JournalEconomic Inquiry
Volume50
Issue number2
DOIs
StatePublished - 1 Apr 2012

ASJC Scopus subject areas

  • Business, Management and Accounting (all)
  • Economics and Econometrics

Fingerprint

Dive into the research topics of 'Carrots and sticks: Prizes and punishments in contests'. Together they form a unique fingerprint.

Cite this