Carrots and Sticks: Prizes and Punishments in Contests
AbstractWe study optimal contest design in situations where the designer can reward high performance agents with positive prizes and punish low performance agents with negative prizes. We link the optimal prize structure to the curvature of distribution of abilities in the population. In particular, we identify conditions under which, even if punishment is costly, punishing the bottom is more effective than rewarding the top in eliciting effort input. If punishment is costless, we study the optimal number of punishments in the contest.
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Bibliographic InfoPaper provided by University of Toronto, Department of Economics in its series Working Papers with number tecipa-399.
Length: 19 pages
Date of creation: 25 Mar 2010
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Contests; All-pay auctions; Punishments; Order Statistics;
Other versions of this item:
- Benny Moldovanu & Aner Sela & Xianwen Shi, 2012. "Carrots And Sticks: Prizes And Punishments In Contests," Economic Inquiry, Western Economic Association International, vol. 50(2), pages 453-462, 04.
- Moldovanu, Benny & Sela, Aner & Shi, Xianwen, 2008. "Carrots and Sticks: Prizes and Punishments in Contests," CEPR Discussion Papers 6770, C.E.P.R. Discussion Papers.
- Benny Modovanu & Aner Sela & Xianwen Shi, 2008. "Carrots and Sticks: Prizes and Punishments in Contests," Working Papers 0802, Ben-Gurion University of the Negev, Department of Economics.
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
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