The Optimal Prize Structure of Symmetric Tullock Contests
14 Pages Posted: 30 Sep 2009 Last revised: 16 Dec 2009
Date Written: September 17, 2009
Abstract
We show that the optimal prize structure of symmetric n-player Tullock tournaments assigns the entire prize pool to the winner, provided that a symmetric pure strategy equilibrium exists. If such an equilibrium fails to exist under the winner-take-all structure, we construct the optimal prize structure which improves existence conditions by dampening efforts. If no such optimal equilibrium exists, no symmetric pure strategy equilibrium induces positive efforts.
Keywords: Tournaments, Incentive structures, Rent seeking
JEL Classification: C7, D72, J31
Suggested Citation: Suggested Citation
Schweinzer, Paul and Segev, Ella, The Optimal Prize Structure of Symmetric Tullock Contests (September 17, 2009). Available at SSRN: https://ssrn.com/abstract=1480404 or http://dx.doi.org/10.2139/ssrn.1480404
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