Optimal Contest Design: A General Approach

Letina, Igor; Liu, Shuo; Netzer, Nick (May 2020). Optimal Contest Design: A General Approach (Discussion Papers 20-11). Bern: Departement of Economics

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We consider the design of contests for n agents when the principal can choose both the prize profile and the contest success function. Our framework includes Tullock contests, Lazear-Rosen tournaments and all-pay contests as special cases, among others. We show that the optimal contest has an intermediate degree of competitiveness in the contest success function, and a minimally competitive prize profile with n−1 identical prizes. The optimum can be achieved with a nested Tullock contest. We extend the model to allow for imperfect performance measurement and
for heterogeneous agents. We relate our results to a recent literature which has asked similar questions but has typically focused on the design of either the prize profile or the contest success function

Item Type:

Working Paper

Division/Institute:

03 Faculty of Business, Economics and Social Sciences > Department of Economics

UniBE Contributor:

Letina, Igor

Subjects:

300 Social sciences, sociology & anthropology > 330 Economics

Series:

Discussion Papers

Publisher:

Departement of Economics

Language:

English

Submitter:

Dino Collalti

Date Deposited:

13 Jan 2021 15:46

Last Modified:

13 Jan 2021 15:46

BORIS DOI:

10.48350/150266

URI:

https://boris.unibe.ch/id/eprint/150266

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