Competitive problem solving and the optimal prize schemes
AbstractAgents compete to solve a problem. Each agent simultaneously chooses either a safe method or a risky method to solve the problem. This paper analyzes a prize scheme as an incentive to induce the optimal risk-taking level which maximizes the designerʼs interest. It is shown that whenever the winner-take-all scheme induces excessive risk-taking, there exists a prize scheme which induces the optimal risk-taking. Moreover, the existence of such a prize scheme is guaranteed if the number of competitors is sufficiently large.
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Bibliographic InfoArticle provided by Elsevier in its journal Games and Economic Behavior.
Volume (Year): 75 (2012)
Issue (Month): 2 ()
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Web page: http://www.elsevier.com/locate/inca/622836
Optimal prize scheme; Risk taking; Experimentation; Problem solving;
Other versions of this item:
- Toru Suzuki, 2010. "Competitive Problem Solving and the Optimal Prize Schemes," Jena Economic Research Papers 2010-083, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
- O32 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Management of Technological Innovation and R&D
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