Contest architecture

Benny Moldovanu, Aner Sela

Research output: Contribution to journalArticlepeer-review

180 Scopus citations

Abstract

A contest architecture specifies how the contestants are split among several sub-contests whose winners compete against each other (while other players are eliminated). We compare the performance of such dynamic schemes to that of static winner-take-all contests from the point of view of a designer who maximizes either the expected total effort or the expected highest effort. For the case of a linear cost of effort, our main results are: (1) If the designer maximizes expected total effort, the optimal architecture is a single grand static contest. (2) If the designer maximizes the expected highest effort, and if there are sufficiently many competitors, it is optimal to split the competitors in two divisions, and to have a final among the two divisional winners. Finally, if the effort cost functions are convex, the designer may benefit by splitting the contestants into several sub-contests, or by awarding prizes to all finalists.

Original languageEnglish
Pages (from-to)70-96
Number of pages27
JournalJournal of Economic Theory
Volume126
Issue number1
DOIs
StatePublished - 1 Jan 2006

Keywords

  • Elimination tournament
  • Incentives
  • Optimal architecture
  • Prizes

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