On the Optimal Design of Unfair Contests
27 Pages Posted: 30 Oct 2002
Date Written: October 3, 2002
Abstract
Contests are often unfair in the sense that outperforming the rival may not be enough to be the winner, because one contestant is favored by the allocation rule, while the other one is handicapped. We consider a discriminatory contest with handicaps and derive the contestants equilibrium behaviour. From a social point of view, the disadvantage of handicaps is that the prize may be awarded to an inferior contestant. However, there is also an advantage of handicaps, since the overall effort exerted to win the prize is decreasing in the degree of unfairness. We characterize situations in which it is optimal for an authority to either stipulate a fair contest, an interior degree of unfairness or even an infinitely unfair contest by awarding the prize directly to the favored contestant.
Keywords: Asymmetric contests, asymmetric information, contest design
JEL Classification: D44, D72, D82
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Investment in the Absence of Property Rights: The Role of Incumbency Advantages
-
Investment in the Absence of Property Rights: The Role of Incumbency Advantages
-
The Market for Protection and the Origin of the State
By Kai A. Konrad and Stergios Skaperdas
-
By Gil S. Epstein and Shmuel Nitzan
-
The Struggle Over Migration Policy
By Gil S. Epstein and Shmuel Nitzan
-
Political Culture and Monopoly Price Determination
By Gil S. Epstein and Shmuel Nitzan
-
Strategic Restraint in Contests
By Gil S. Epstein and Shmuel Nitzan
-
Effort and Performance in Public-Policy Contents
By Gil S. Epstein and Shmuel Nitzan