Abstract
This paper considers a contest with one organizer and two (or more) contestants that compete to win a prize that is set by the organizer (the winner takes all). In the first stage, the organizer determines the amount of money he needs to borrow in order to establish the prize of the contest. In the second stage, each contestant determines his efforts in the contest. The contest prize is determined according to the abilities of all the contestants and the cost of the loan. It is shown that if the organizer borrows the optimal amount of money for the prize, in some situations this setup can yield 100% return on investment (ROI).
| Original language | English |
|---|---|
| Pages (from-to) | 2073-2078 |
| Number of pages | 6 |
| Journal | Economics Bulletin |
| Volume | 38 |
| Issue number | 4 |
| State | Published - 1 Jan 2018 |
| Externally published | Yes |
ASJC Scopus subject areas
- General Economics, Econometrics and Finance