Quality contests

We consider a principal who faces many identical competitors, and who can distribute a prize fund over two consecutive contests. The winner of contest one gains an advantage in contest two where his effort is more productive than all rivals. We identify a tipping point for the productivity parameter, below which it is optimal for an effort-maximizing principal to place the whole prize in the second contest. Above this level, a single symmetric contest is preferred. The institution chosen depends inextricably upon the number of competitors and their valuation of future gains and costs. We identify the optimal setting of the productivity parameter, showing that introducing asymmetry can increase total efforts by as much as one quarter compared to a single symmetric contest. Keywords Contest • Win advantage • Effort incentives • Budget division JEL Classification D74 • D72 We are grateful to participants at various seminars and workshops for comments. We are grateful for the insightful comments of two anonymous referees, an Associate Editor, and the Editor Huseyin Yildirim. Errors are our own. Nilssen has received funding for his research through the ESOP Centre at the University of Oslo. ESOP received support from the Research Council of Norway through its Centres of Excellence funding scheme, Project Number 179552.

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“…This is similar to the quality contest inSerena (2017). We are grateful to the Associate Editor for pointing this out to us.…”

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confidence: 72%

Gaining advantage by winning contests

2020

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“…The objective function can be written as

normalΛ false(bold-italicx, bold-italicp, bold-italicv false) = \sum_{i = 1}^{n} p_{i} x_{i},

which clearly satisfies Assumption 2. This objective function has gained increasing attention in the literature (e.g., Moldovanu and Sela 2006, Serena 2017, Barbieri and Serena 2019). A chief executive officer (CEO) succession race motivates candidates to develop their managerial skills when carrying out assigned tasks.…”

Section: Setup and Preliminariesmentioning

confidence: 99%

On the optimal design of biased contests

2020

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This paper explores the optimal design of biased contests. A designer imposes an identity‐dependent treatment on contestants that varies the balance of the playing field. A generalized lottery contest typically yields no closed‐form equilibrium solutions, which nullifies the usual implicit programming approach to optimal contest design and limits analysis to restricted settings. We propose an alternative approach that allows us to circumvent this difficulty and characterize the optimum in a general setting under a wide array of objective functions without solving for the equilibrium explicitly. Our technique applies to a broad array of contest design problems, and the analysis it enables generates novel insights into incentive provisions in contests and their optimal design. For instance, we demonstrate that the conventional wisdom of leveling the playing field, which is obtained in limited settings in previous studies, does not generally hold.

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“…15 A contest designer could also have different objectives, like competitive balance or the quality of the winner, see Serena (2017) for an insightful discussion. An interest in competitive balance or attaching a value to the participation by disadvantaged agents (perhaps on affirmative action grounds) provide different rationales for restricting competition than the logic highlighted in our analysis.…”

Section: Modelmentioning

confidence: 99%

Semi-targeted all-pay auctions: A partial exclusion principle

Dahm

2018

International Journal of Industrial Organization

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This paper studies the effects of a specific affirmative action policy in complete information all-pay auctions when players differ in ability. The contest organiser splits the overall prize of the competition into a targeted and an untargeted prize. The targeted prize is exclusively for disadvantaged (low-ability) agents and excludes advantaged agents partially from the overall prize. We consider a setting with one high-ability and two low-ability contestants and fully characterise equilibrium. Assuming that the contest organiser aims to maximise expected total effort, we show that (i) almost any targeted prize is preferable to a standard all-pay auction without targeted prize; (ii) the exclusion principle (Baye, Kovenock and de Vries, 1993) can be implemented by a wide range of sufficiently large targeted prizes; and (iii) partial exclusion by means of an appropriately chosen targeted prize benefits the organiser more than complete exclusion. We also discuss the robustness of our results in settings with more than three agents.

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Quality contests

Cited by 38 publications

References 18 publications

Gaining advantage by winning contests

Gaining advantage by winning contests

On the optimal design of biased contests

Semi-targeted all-pay auctions: A partial exclusion principle

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