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Why the Olympics have three prizes and not just one

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  • Pavlo Blavatskyy
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    Abstract

    There are at least two reasons why multiple prizes can be optimal in symmetric imperfectly discriminating contests. First, the introduction of multiple prizes reduces the standard deviation of contestants’ effort in asymmetric equilibria, when the majority of contestants actively participate in competition. Second, the introduction of multiple prizes may increase the aggregate (average) effort contributed in the contest. When more of a total prize fund is shifted away from the first prize, on the one hand, the active contestants obtain an incentive to reduce their individual effort, but, on the other hand, the number of active contestants may increase. Therefore, the aggregate (average) effort may increase when the number of active contestants in equilibrium increases.

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    Bibliographic Info

    Paper provided by Institute for Empirical Research in Economics - University of Zurich in its series IEW - Working Papers with number 200.

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    Handle: RePEc:zur:iewwpx:200

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    Related research

    Keywords: symmetric contest; imperfectly discriminating contest; logit; asymmetric equilibria; prize structure; sport;

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    1. Baye, M.R. & Kovenock, D., 1993. "The Solution of the Tullock Rent-Seeking Game when R > 2 : Mixed-Strategy Equilibria and Mean Dissipation Rates," Discussion Paper 1993-68, Tilburg University, Center for Economic Research.
    2. Perez-Castrillo, J David & Verdier, Thierry, 1992. " A General Analysis of Rent-Seeking Games," Public Choice, Springer, vol. 73(3), pages 335-50, April.
    3. Nitzan, Shmuel, 1994. "Modelling rent-seeking contests," European Journal of Political Economy, Elsevier, vol. 10(1), pages 41-60, May.
    4. Baye, M.R. & Kovenock, D. & De Vries, C.G., 1993. "The Solution to the Tullock Rent-Seeking Game when r>2: Mixed-Strategy Equilibria and Mean Dissipation Rates," Purdue University Economics Working Papers 1039, Purdue University, Department of Economics.
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Why three medals at the Olympics?
      by Economic Logician in Economic Logic on 2008-08-11 09:26:00

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