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Favoritism in asymmetric contests: Head starts and handicaps

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  • Kirkegaard, René

Abstract

I examine a contest with identity-dependent rules in which contestants are privately informed and ex ante heterogeneous. A contestant may suffer from a handicap or benefit from a head start. The former reduces the contestantʼs score by a fixed percentage; the latter is an additive bonus. Although total effort increases if the weak contestant is favored with a head start, the optimal use of handicaps is not as clear-cut. Depending on the nature of the asymmetry, it may or may not be optimal to handicap the strong contestant. Moreover, it is generally optimal to combine the two instruments. For instance, when contestants are sufficiently heterogeneous the weak contestant should be given both a head start and a handicap. It may also be possible to induce higher effort and at the same time make both contestants better off ex ante.

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Bibliographic Info

Article provided by Elsevier in its journal Games and Economic Behavior.

Volume (Year): 76 (2012)
Issue (Month): 1 ()
Pages: 226-248

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Handle: RePEc:eee:gamebe:v:76:y:2012:i:1:p:226-248

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Web page: http://www.elsevier.com/locate/inca/622836

Related research

Keywords: All-pay auctions; Contests; Favoritism; Handicap; Head start;

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References

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Cited by:
  1. Franke, Jörg & Kanzow, Christian & Leininger, Wolfgang & Schwartz, Alexandra, 2013. "Lottery versus All-Pay Auction Contests: A Revenue Dominance Theorem," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79998, Verein für Socialpolitik / German Economic Association.
  2. Vlad Mares & Jeroen Swinkels, 2014. "Comparing first and second price auctions with asymmetric bidders," International Journal of Game Theory, Springer, Springer, vol. 43(3), pages 487-514, August.
  3. Matthias Dahm & Patricia Esteve, . "Affirmative Action through Extra Prizes," Discussion Papers, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham 2014-08, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  4. Seel, Christian, 2013. "The Value of Information in Asymmetric All-Pay Auctions," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79930, Verein für Socialpolitik / German Economic Association.
  5. Kräkel, Matthias & Szech, Nora & Bieberstein, Frauke von, 2013. "Externalities in Recruiting," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 414, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  6. David Pérez-Castrillo & David Wettstein, 2014. "Innovation Contests," CESifo Working Paper Series 4712, CESifo Group Munich.
  7. Pradeep Dubey, 2012. "On the Role of Information in Contests," Department of Economics Working Papers, Stony Brook University, Department of Economics 12-11, Stony Brook University, Department of Economics.
  8. Alasdair Brown & Subhasish M. Chowdhury, 2014. "The Hidden Perils of Affirmative Action: Sabotage in Handicap Contests," University of East Anglia Applied and Financial Economics Working Paper Series, School of Economics, University of East Anglia, Norwich, UK. 062, School of Economics, University of East Anglia, Norwich, UK..

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