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From Monopoly to Competition: Optimal Contests Prevail

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  • Xiaotie Deng
  • Yotam Gafni
  • Ron Lavi
  • Tao Lin
  • Hongyi Ling

Abstract

We study competition among contests in a general model that allows for an arbitrary and heterogeneous space of contest design, where the goal of the contest designers is to maximize the contestants' sum of efforts. Our main result shows that optimal contests in the monopolistic setting (i.e., those that maximize the sum of efforts in a model with a single contest) form an equilibrium in the model with competition among contests. Under a very natural assumption these contests are in fact dominant, and the equilibria that they form are unique. Moreover, equilibria with the optimal contests are Pareto-optimal even in cases where other equilibria emerge. In many natural cases, they also maximize the social welfare.

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  • Xiaotie Deng & Yotam Gafni & Ron Lavi & Tao Lin & Hongyi Ling, 2021. "From Monopoly to Competition: Optimal Contests Prevail," Papers 2107.13363, arXiv.org.
    • Handle: RePEc:arx:papers:2107.13363
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    References listed on IDEAS

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    Cited by:

    1. Daniel Rehsmann & Béatrice Roussillon & Paul Schweinzer, 2023. "Contesting Fake News," CESifo Working Paper Series 10632, CESifo.

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