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Contests with endogenous discrimination

Author

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  • Li, Sanxi
  • Yu, Jun

Abstract

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.

Suggested Citation

  • Li, Sanxi & Yu, Jun, 2012. "Contests with endogenous discrimination," Economics Letters, Elsevier, vol. 117(3), pages 834-836.
  • Handle: RePEc:eee:ecolet:v:117:y:2012:i:3:p:834-836 DOI: 10.1016/j.econlet.2012.08.047
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    References listed on IDEAS

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    1. Epstein, Gil S. & Mealem, Yosef & Nitzan, Shmuel, 2011. "Political culture and discrimination in contests," Journal of Public Economics, Elsevier, pages 88-93.
    2. Arye L. Hillman & John G. Riley, 1989. "Politically Contestable Rents And Transfers," Economics and Politics, Wiley Blackwell, vol. 1(1), pages 17-39, March.
    3. Konrad, Kai A., 2002. "Investment in the absence of property rights; the role of incumbency advantages," European Economic Review, Elsevier, vol. 46(8), pages 1521-1537, September.
    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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    Citations

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    Cited by:

    1. Jörg Franke & Wolfgang Leininger & Cédric Wasser, 2016. "Optimal Favoritism in All-Pay Auctions and Lottery Contests," CESifo Working Paper Series 6274, CESifo Group Munich.
    2. Bjørnskov, Christian, 2015. "Does economic freedom really kill? On the association between ‘Neoliberal’ policies and homicide rates," European Journal of Political Economy, Elsevier, vol. 37(C), pages 207-219.
    3. Epstein, Gil S. & Mealem, Yosef, 2013. "Politicians, Governed vs. Non-Governed Interest Groups and Rent Dissipation," IZA Discussion Papers 7736, Institute for the Study of Labor (IZA).
    4. Yosef Mealem & Shmuel Nitzan, 2014. "Equity and effectiveness of optimal taxation in contests under an all-pay auction," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 42(2), pages 437-464, February.
    5. Drugov, Mikhail & Ryvkin, Dmitry, 2017. "Biased contests for symmetric players," Games and Economic Behavior, Elsevier, vol. 103(C), pages 116-144.
    6. Sheng Bi & Yuanyuan Li, 2016. "Holdup and hiring discrimination with search friction," Documents de travail du Centre d'Economie de la Sorbonne 16002, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    7. Yosef Mealem & Shmuel Nitzan, 2016. "Discrimination in contests: a survey," Review of Economic Design, Springer;Society for Economic Design, vol. 20(2), pages 145-172, June.
    8. Jörg Franke & Wolfgang Leininger & Cédric Wasser, 2014. "Revenue Maximizing Head Starts in Contests," Ruhr Economic Papers 0524, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    9. Sheng Bi & Yuanyuan Li, 2016. "Holdup and hiring discrimination with search friction," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01277548, HAL.
    10. repec:zbw:rwirep:0524 is not listed on IDEAS
    11. Gil Epstein & Yosef Mealem, 2015. "Politicians, governed versus non-governed interest groups and rent dissipation," Theory and Decision, Springer, vol. 79(1), pages 133-149, July.
    12. Franke, Jörg & Leininger, Wolfgang & Wasser, Cédric, 2014. "Revenue Maximizing Head Starts in Contests," Ruhr Economic Papers 524, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.

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