Optimal Contest Design When The Designer's Payoff Depends On Competitive Balance
AbstractThis paper investigates optimal contest design when the designerâs payoff is increasing in competitive balance between contestants. A two-player contest with asymmetric effort costs (asymmetric abilities) is considered. Competitive balance is measured by the difference in winning probabilities of the contestants. In contrast to previous studies, the impact of competitive balance on the optimal prize is not unique, but depends on the shape of the contest success function. Furthermore, it is shown that including competitive balance in the designerâs objective may induce the designer to increase the contestantsâ effort costs, for example, by tightening the rules of the contest.
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Bibliographic InfoPaper provided by Royal Economic Society in its series Royal Economic Society Annual Conference 2004 with number 156.
Date of creation: 17 Sep 2004
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Other versions of this item:
- Marco Runkel, 2003. "Optimal Contest Design when the Designer’s Payoff Depends on Competitive Balance," CESifo Working Paper Series 1009, CESifo Group Munich.
- NEP-ALL-2004-08-23 (All new papers)
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