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Contests with endogenous discrimination

  • Li, Sanxi
  • Yu, Jun
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    This paper builds a complete information contest model with endogenous discrimination. We show that a revenue-maximizing contest designer will optimally set a bias towards a weaker contestant against a stronger contestant and completely eliminate the asymmetry between the two. Moreover, in contrast to fair contest models, where the revenue-maximizing contest designer is better off if the weaker contestant becomes stronger or the stronger contestant becomes weaker, our model shows that the opposite result may arise.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0165176512005095
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    Article provided by Elsevier in its journal Economics Letters.

    Volume (Year): 117 (2012)
    Issue (Month): 3 ()
    Pages: 834-836

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    Handle: RePEc:eee:ecolet:v:117:y:2012:i:3:p:834-836
    Contact details of provider: Web page: http://www.elsevier.com/locate/ecolet

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    1. Konrad, Kai A., 2001. "Investment in the absence of property rights: the role of incumbency advantages
      [Investitionsanreize bei unvollständigen Eigentumsrechten: die Rolle von Asymmetrien in Aneignungskonflikten]
      ," Discussion Papers, Research Unit: Market Processes and Governance FS IV 01-18, Social Science Research Center Berlin (WZB).
    2. Gil S. Epstein & Yosef Mealem & Shmuel Nitzan, 2010. "Political Culture and Discrimination in Contests," Working Papers 2010-18, Bar-Ilan University, Department of Economics.
    3. Arye L. Hillman & John G. Riley, 1987. "Politically Contestable Rents and Transfers," UCLA Economics Working Papers 452, UCLA Department of Economics.
    4. Clark, Derek J. & Riis, Christian, 2000. "Allocation efficiency in a competitive bribery game," Journal of Economic Behavior & Organization, Elsevier, vol. 42(1), pages 109-124, May.
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