IDEAS home Printed from https://ideas.repec.org/a/eee/jeborg/v153y2018icp123-142.html
   My bibliography  Save this article

Affirmative action through extra prizes

Author

Listed:
  • Dahm, Matthias
  • Esteve-González, Patricia

Abstract

Some affirmative action policies establish that a set of disadvantaged competitors has access to an extra prize. We analyse the effects of creating an extra prize by reducing the prize in the main competition. Contestants differ in ability and agents with relatively low ability belong to a disadvantaged minority. All contestants compete for the main prize, but only disadvantaged agents can win the extra prize. We show that an extra prize is a powerful tool to ensure participation of disadvantaged agents. Moreover, for intermediate levels of the disadvantage of the minority, introducing an extra prize increases total equilibrium effort compared to a standard contest. Thus, even a contest designer not interested in affirmative action might establish an extra prize in order to enhance competition.

Suggested Citation

  • Dahm, Matthias & Esteve-González, Patricia, 2018. "Affirmative action through extra prizes," Journal of Economic Behavior & Organization, Elsevier, vol. 153(C), pages 123-142.
    • Handle: RePEc:eee:jeborg:v:153:y:2018:i:c:p:123-142
    DOI: 10.1016/j.jebo.2018.06.016
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167268118301756
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jebo.2018.06.016?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Lazear, Edward P & Rosen, Sherwin, 1981. "Rank-Order Tournaments as Optimum Labor Contracts," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 841-864, October.
    2. Dahm, Matthias & Esteve-González, Patricia, 2018. "Affirmative action through extra prizes," Journal of Economic Behavior & Organization, Elsevier, vol. 153(C), pages 123-142.
    3. Benny Moldovanu & Aner Sela, 2001. "The Optimal Allocation of Prizes in Contests," American Economic Review, American Economic Association, vol. 91(3), pages 542-558, June.
    4. Andrew Schotter & Keith Weigelt, 1992. "Asymmetric Tournaments, Equal Opportunity Laws, and Affirmative Action: Some Experimental Results," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(2), pages 511-539.
    5. José Alcalde & Matthias Dahm, 2007. "Tullock and Hirshleifer: a meeting of the minds," Review of Economic Design, Springer;Society for Economic Design, vol. 11(2), pages 101-124, September.
    6. Matthias Dahm & Nicolás Porteiro, 2008. "Biased contests," Public Choice, Springer, vol. 136(1), pages 55-67, July.
    7. James Fain, 2009. "Affirmative Action Can Increase Effort," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 30(2), pages 168-175, June.
    8. Moldovanu, Benny & Sela, Aner, 2006. "Contest architecture," Journal of Economic Theory, Elsevier, vol. 126(1), pages 70-96, January.
    9. Baye, Michael R & Kovenock, Dan & de Vries, Casper G, 1993. "Rigging the Lobbying Process: An Application of the All-Pay Auction," American Economic Review, American Economic Association, vol. 83(1), pages 289-294, March.
    10. Aner Sela, 2012. "Sequential two-prize contests," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 51(2), pages 383-395, October.
    11. Pastine, Ivan & Pastine, Tuvana, 2012. "Student incentives and preferential treatment in college admissions," Economics of Education Review, Elsevier, vol. 31(1), pages 123-130.
    12. Andrew Schotter & Allan Corns, 1999. "Can Affirmative Action Be Cost Effective? An Experimental Examination of Price-Preference Auctions," American Economic Review, American Economic Association, vol. 89(1), pages 291-305, March.
    13. Szymanski, Stefan & Valletti, Tommaso M., 2005. "Incentive effects of second prizes," European Journal of Political Economy, Elsevier, vol. 21(2), pages 467-481, June.
    14. Stergios Skaperdas, 1996. "Contest success functions (*)," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 7(2), pages 283-290.
    15. Hanming Fang & Andrea Moro, 2010. "Theories of Statistical Discrimination and Affirmative Action: A Survey," NBER Working Papers 15860, National Bureau of Economic Research, Inc.
    16. Alcalde, José & Dahm, Matthias, 2013. "Competition for procurement shares," Games and Economic Behavior, Elsevier, vol. 80(C), pages 193-208.
    17. Ghazala Azmat & Marc Möller, 2009. "Competition among contests," RAND Journal of Economics, RAND Corporation, vol. 40(4), pages 743-768, December.
    18. Roland Fryer & Glenn Loury, 2005. "Affirmative action in winner-take-all markets," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 3(3), pages 263-280, December.
    19. Fu, Qiang & Lu, Jingfeng, 2009. "The beauty of "bigness": On optimal design of multi-winner contests," Games and Economic Behavior, Elsevier, vol. 66(1), pages 146-161, May.
    20. Drugov, Mikhail & Ryvkin, Dmitry, 2017. "Biased contests for symmetric players," Games and Economic Behavior, Elsevier, vol. 103(C), pages 116-144.
    21. Matthias Dahm, 2017. "All-Pay Auctions with Extra Prize: A Partial Exclusion Principle," Discussion Papers 2017-01, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    22. Clark, Derek J. & Riis, Christian, 2000. "Allocation efficiency in a competitive bribery game," Journal of Economic Behavior & Organization, Elsevier, vol. 42(1), pages 109-124, May.
    23. Richard Cornes & Roger Hartley, 2005. "Asymmetric contests with general technologies," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 26(4), pages 923-946, November.
    24. Muriel Niederle & Lise Vesterlund, 2011. "Gender and Competition," Annual Review of Economics, Annual Reviews, vol. 3(1), pages 601-630, September.
    25. Arye L. Hillman & John G. Riley, 1989. "Politically Contestable Rents And Transfers," Economics and Politics, Wiley Blackwell, vol. 1(1), pages 17-39, March.
    26. Yeon-Koo Che & Ian Gale, 2003. "Optimal Design of Research Contests," American Economic Review, American Economic Association, vol. 93(3), pages 646-671, June.
    27. Brown, Alasdair & Chowdhury, Subhasish M., 2017. "The hidden perils of affirmative action: Sabotage in handicap contests," Journal of Economic Behavior & Organization, Elsevier, vol. 133(C), pages 273-284.
    28. Stein, William E, 2002. "Asymmetric Rent-Seeking with More Than Two Contestants," Public Choice, Springer, vol. 113(3-4), pages 325-336, December.
    29. Alcalde, José & Dahm, Matthias, 2019. "Dual sourcing with price discovery," Games and Economic Behavior, Elsevier, vol. 115(C), pages 225-246.
    30. Jörg Franke & Christian Kanzow & Wolfgang Leininger & Alexandra Schwartz, 2013. "Effort maximization in asymmetric contest games with heterogeneous contestants," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 52(2), pages 589-630, March.
    31. Franke, Jörg, 2012. "Affirmative action in contest games," European Journal of Political Economy, Elsevier, vol. 28(1), pages 105-118.
    32. Gianni De Fraja, 2005. "Reverse Discrimination And Efficiency In Education," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 46(3), pages 1009-1031, August.
    33. Robert Ridlon & Jiwoong Shin, 2013. "Favoring the Winner or Loser in Repeated Contests," Marketing Science, INFORMS, vol. 32(5), pages 768-785, September.
    34. Michael H. Rothkopf & Ronald M. Harstad & Yuhong Fu, 2003. "Is Subsidizing Inefficient Bidders Actually Costly?," Management Science, INFORMS, vol. 49(1), pages 71-84, January.
    35. Qiang Fu, 2006. "A Theory of Affirmative Action in College Admissions," Economic Inquiry, Western Economic Association International, vol. 44(3), pages 420-428, July.
    36. Alexander Matros & David Michael Rietzke, 2017. "Contests on Networks," Working Papers 156630581, Lancaster University Management School, Economics Department.
    37. Calsamiglia, Caterina & Franke, Jörg & Rey-Biel, Pedro, 2013. "The incentive effects of affirmative action in a real-effort tournament," Journal of Public Economics, Elsevier, vol. 98(C), pages 15-31.
    38. Roger B. Myerson, 1981. "Optimal Auction Design," Mathematics of Operations Research, INFORMS, vol. 6(1), pages 58-73, February.
    39. Ron Siegel, 2014. "Asymmetric Contests with Head Starts and Nonmonotonic Costs," American Economic Journal: Microeconomics, American Economic Association, vol. 6(3), pages 59-105, August.
    40. David Neumark & Harry Holzer, 2000. "Assessing Affirmative Action," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 483-568, September.
    41. Jennifer Brown, 2011. "Quitters Never Win: The (Adverse) Incentive Effects of Competing with Superstars," Journal of Political Economy, University of Chicago Press, vol. 119(5), pages 982-1013.
    42. Konrad, Kai A., 2009. "Strategy and Dynamics in Contests," OUP Catalogue, Oxford University Press, number 9780199549603.
    43. D. Roderick Kiewiet, 2015. "Tim Groseclose, Cheating: an insider’s report on the use of race in admissions at UCLA," Public Choice, Springer, vol. 162(1), pages 205-209, January.
    44. Fang, Hanming, 2002. "Lottery versus All-Pay Auction Models of Lobbying," Public Choice, Springer, vol. 112(3-4), pages 351-371, September.
    45. Nti, Kofi O, 1999. "Rent-Seeking with Asymmetric Valuations," Public Choice, Springer, vol. 98(3-4), pages 415-430, March.
    46. Ian Ayres & Peter Cramton, 1996. "Deficit Reduction Through Diversity: How Affirmative Action at the FCC Increased Auction Competition," Papers of Peter Cramton 96slr, University of Maryland, Department of Economics - Peter Cramton, revised 09 Jun 1998.
    47. Jörg Franke, 2012. "The incentive effects of levelling the playing field -- an empirical analysis of amateur golf tournaments," Applied Economics, Taylor & Francis Journals, vol. 44(9), pages 1193-1200, March.
    48. Luis Corchón & Matthias Dahm, 2010. "Foundations for contest success functions," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 43(1), pages 81-98, April.
    49. Kirkegaard, René, 2012. "Favoritism in asymmetric contests: Head starts and handicaps," Games and Economic Behavior, Elsevier, vol. 76(1), pages 226-248.
    50. Serena, Marco, 2017. "Quality contests," European Journal of Political Economy, Elsevier, vol. 46(C), pages 15-25.
    51. Ewerhart, Christian & Fieseler, Karsten, 2003. "Procurement Auctions and Unit-Price Contracts," RAND Journal of Economics, The RAND Corporation, vol. 34(3), pages 569-581, Autumn.
    52. David Pérez-Castrillo & David Wettstein, 2012. "Innovation Contests," Working Papers 654, Barcelona School of Economics.
    53. Alexander Matros, 2006. "Rent-seeking with asymmetric valuations: Addition or deletion of a player," Public Choice, Springer, vol. 129(3), pages 369-380, December.
    54. Clark, Derek J & Riis, Christian, 1998. "Competition over More Than One Prize," American Economic Review, American Economic Association, vol. 88(1), pages 276-289, March.
    55. Alcalde, José & Dahm, Matthias, 2010. "Rent seeking and rent dissipation: A neutrality result," Journal of Public Economics, Elsevier, vol. 94(1-2), pages 1-7, February.
    56. Luis C. Corchón & Marco Serena, 2018. "Contest theory," Chapters, in: Luis C. Corchón & Marco A. Marini (ed.), Handbook of Game Theory and Industrial Organization, Volume II, chapter 6, pages 125-146, Edward Elgar Publishing.
    57. Farmer, Amy & Pecorino, Paul, 1999. "Legal Expenditure as a Rent-Seeking Game," Public Choice, Springer, vol. 100(3-4), pages 271-288, September.
    58. David Pérez‐Castrillo & David Wettstein, 2016. "Discrimination In A Model Of Contests With Incomplete Information About Ability," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 57, pages 881-914, August.
    59. Hanming Fang & Peter Norman, 2006. "Government-Mandated Discriminatory Policies: Theory And Evidence," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 47(2), pages 361-389, May.
    60. Lee, Sam-Ho, 2013. "The incentive effect of a handicap," Economics Letters, Elsevier, vol. 118(1), pages 42-45.
    61. Dmitry Ryvkin, 2013. "Heterogeneity of Players and Aggregate Effort in Contests," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 22(4), pages 728-743, December.
    62. Kawamura, Kohei & Moreno de Barreda, Inés, 2014. "Biasing selection contests with ex-ante identical agents," Economics Letters, Elsevier, vol. 123(2), pages 240-243.
    63. Möller, Marc, 2012. "Incentives versus competitive balance," Economics Letters, Elsevier, vol. 117(2), pages 505-508.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dahm, Matthias & Esteve-González, Patricia, 2018. "Affirmative action through extra prizes," Journal of Economic Behavior & Organization, Elsevier, vol. 153(C), pages 123-142.
    2. Subhasish M. Chowdhury & Anastasia Danilov & Martin G. Kocher, 2023. "The Lifecycle of Affirmative Action Policies and Its Effect on Effort and Sabotage Behavior," Rationality and Competition Discussion Paper Series 401, CRC TRR 190 Rationality and Competition.
    3. Fallucchi, Francesco & Quercia, Simone, 2018. "Affirmative action and retaliation in experimental contests," Journal of Economic Behavior & Organization, Elsevier, vol. 156(C), pages 23-40.
    4. Alexander Matros & David Michael Rietzke, 2017. "Contests on Networks," Working Papers 156630581, Lancaster University Management School, Economics Department.
    5. Ratul Lahkar & Rezina Sultana, 2020. "Affirmative Action in Large Population Contests," Working Papers 40, Ashoka University, Department of Economics.
    6. Matthias Dahm, 2017. "All-Pay Auctions with Extra Prize: A Partial Exclusion Principle," Discussion Papers 2017-01, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    7. Subhasish M. Chowdhury & Patricia Esteve‐González & Anwesha Mukherjee, 2023. "Heterogeneity, leveling the playing field, and affirmative action in contests," Southern Economic Journal, John Wiley & Sons, vol. 89(3), pages 924-974, January.
    8. Francesco Fallucchi & Simone Quercia, 2016. "Affirmative action and retaliation in experimental contests," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 16-03, School of Economics, University of East Anglia, Norwich, UK..
    9. Dahm, Matthias, 2018. "Semi-targeted all-pay auctions: A partial exclusion principle," International Journal of Industrial Organization, Elsevier, vol. 61(C), pages 256-282.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Subhasish M. Chowdhury & Patricia Esteve‐González & Anwesha Mukherjee, 2023. "Heterogeneity, leveling the playing field, and affirmative action in contests," Southern Economic Journal, John Wiley & Sons, vol. 89(3), pages 924-974, January.
    2. Barbieri, Stefano & Serena, Marco, 2022. "Biasing dynamic contests between ex-ante symmetric players," Games and Economic Behavior, Elsevier, vol. 136(C), pages 1-30.
    3. Franke, Jörg & Leininger, Wolfgang & Wasser, Cédric, 2018. "Optimal favoritism in all-pay auctions and lottery contests," European Economic Review, Elsevier, vol. 104(C), pages 22-37.
    4. Bastani, Spencer & Giebe, Thomas & Gürtler, Oliver, 2022. "Simple equilibria in general contests," Games and Economic Behavior, Elsevier, vol. 134(C), pages 264-280.
    5. Drugov, Mikhail & Ryvkin, Dmitry, 2017. "Biased contests for symmetric players," Games and Economic Behavior, Elsevier, vol. 103(C), pages 116-144.
    6. Ratul Lahkar & Rezina Sultana, 2020. "Affirmative Action in Large Population Contests," Working Papers 40, Ashoka University, Department of Economics.
    7. Subhasish M. Chowdhury & Anastasia Danilov & Martin G. Kocher, 2023. "The Lifecycle of Affirmative Action Policies and Its Effect on Effort and Sabotage Behavior," Rationality and Competition Discussion Paper Series 401, CRC TRR 190 Rationality and Competition.
    8. Konrad, Kai A., 2007. "Strategy in contests: an introduction [Strategie in Turnieren – eine Einführung]," Discussion Papers, Research Unit: Market Processes and Governance SP II 2007-01, WZB Berlin Social Science Center.
    9. Dahm, Matthias, 2018. "Semi-targeted all-pay auctions: A partial exclusion principle," International Journal of Industrial Organization, Elsevier, vol. 61(C), pages 256-282.
    10. Franke, Jörg & Kanzow, Christian & Leininger, Wolfgang & Schwartz, Alexandra, 2014. "Lottery versus all-pay auction contests: A revenue dominance theorem," Games and Economic Behavior, Elsevier, vol. 83(C), pages 116-126.
    11. Franke, Jörg, 2012. "Affirmative action in contest games," European Journal of Political Economy, Elsevier, vol. 28(1), pages 105-118.
    12. Fu, Qiang & Wu, Zenan, 2020. "On the optimal design of biased contests," Theoretical Economics, Econometric Society, vol. 15(4), November.
    13. Cedric Duvinage & Peter-J. Jost, 2019. "The Role of Referees in Professional Sports Contests," Journal of Sports Economics, , vol. 20(8), pages 1014-1050, December.
    14. Emmanuel Dechenaux & Dan Kovenock & Roman Sheremeta, 2015. "A survey of experimental research on contests, all-pay auctions and tournaments," Experimental Economics, Springer;Economic Science Association, vol. 18(4), pages 609-669, December.
    15. Gil S. Epstein & Yosef Mealem & Shmuel Nitzan, 2013. "Lotteries vs. All-Pay Auctions in Fair and Biased Contests," Economics and Politics, Wiley Blackwell, vol. 25(1), pages 48-60, March.
    16. Yosef Mealem & Shmuel Nitzan, 2014. "Equity and effectiveness of optimal taxation in contests under an all-pay auction," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 42(2), pages 437-464, February.
    17. Fu, Qiang & Wu, Zenan & Zhu, Yuxuan, 2022. "On equilibrium existence in generalized multi-prize nested lottery contests," Journal of Economic Theory, Elsevier, vol. 200(C).
    18. Kaplan, Todd R. & Zamir, Shmuel, 2015. "Advances in Auctions," Handbook of Game Theory with Economic Applications,, Elsevier.
    19. Brown, Alasdair & Chowdhury, Subhasish M., 2017. "The hidden perils of affirmative action: Sabotage in handicap contests," Journal of Economic Behavior & Organization, Elsevier, vol. 133(C), pages 273-284.
    20. Ewerhart, Christian, 2017. "Contests with small noise and the robustness of the all-pay auction," Games and Economic Behavior, Elsevier, vol. 105(C), pages 195-211.

    More about this item

    Keywords

    Asymmetric contest; Equality of opportunity; Affirmative action; Discrimination; Prize structure; Exclusion principle;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J78 - Labor and Demographic Economics - - Labor Discrimination - - - Public Policy (including comparable worth)

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jeborg:v:153:y:2018:i:c:p:123-142. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jebo .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.