Orchestrating Contests with Heterogeneous Participants
AbstractThis paper compares static one-stage and dynamic two-stage contests with heterogeneous participants. I find that aggregate effort provision (AEP) is strictly higher in the dynamic than in the static format in any interior equilibrium with heterogeneous contestants. Since AEP is identical in both formats in case of homogeneity, this finding suggests that the well-known (adverse) incentive effect of heterogeneity crucially depends on the structure of the competition – the effect is lower in dynamic than in static formats. The paper also shows that heterogeneity between contestants is crucial to explain recent empirical evidence on the comparison of different contest structures.
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Bibliographic InfoPaper provided by University of St. Gallen, School of Economics and Political Science in its series Economics Working Paper Series with number 1218.
Length: 27 pages
Date of creation: Aug 2012
Date of revision:
Multi-Stage Contest; Heterogeneity; Contest Design;
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