The optimal prize structure of symmetric Tullock contests
AbstractWe show that the optimal prize structure of symmetric n-player Tullock tournaments assigns the entire prize pool to the winner, provided that a symmetric pure strategy equilibrium exists. If such an equilibrium fails to exist under the winner-take-all structure, we construct the optimal prize structure which improves existence conditions by dampening efforts. If no such optimal equilibrium exists, no symmetric pure strategy equilibrium induces positive efforts.
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Bibliographic InfoPaper provided by Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich in its series Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems with number 250.
Date of creation: Nov 2008
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Tournaments; Incentive structures; Rent seeking;
Other versions of this item:
- Paul Schweinzer & Ella Segev, 2012. "The optimal prize structure of symmetric Tullock contests," Public Choice, Springer, vol. 153(1), pages 69-82, October.
- C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
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