Optimal Ties in Contests
AbstractI analyze a mechanism design of a tournament in which the principal can strategically enhance the probability of a tie. The principal decides on a âtie distanceâ and announces a rule according to which a tie is declared if the difference between the two contestantsâ performances is within the tie distance. I show that the contestantsâ equilibrium efforts do not depend on the prizes awarded in case of a tie. I find that there are cases in which the optimal mechanism has a positive tie distance.
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Date of creation: 11 Sep 2006
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Other versions of this item:
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-09-16 (All new papers)
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