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Optimal advantage allocation in repeated contests

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  • Pham, Ngoc Anh

Abstract

We study a two-stage Tullock contest with asymmetric players where a designer allocates a productivity-enhancing advantage based on past performance. The advantage’s magnitude is exogenously fixed, so the designer’s choice is purely allocative: who receives it. We characterize the optimal rule and show a sharp threshold in asymmetry. With moderate heterogeneity, favouring the stage-1 winner strengthens incentives and maximises total effort. With sufficiently large heterogeneity, favouring the stage-1 loser restores competitiveness in stage 2 and raises aggregate effort. The results clarify optimal contest design under limited favouritism instruments.

Suggested Citation

  • Pham, Ngoc Anh, 2026. "Optimal advantage allocation in repeated contests," Economics Letters, Elsevier, vol. 263(C).
    • Handle: RePEc:eee:ecolet:v:263:y:2026:i:c:s0165176526001436
    DOI: 10.1016/j.econlet.2026.112949
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    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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