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Prize sharing in collective contests

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  • Nitzan, Shmuel
  • Ueda, Kaoru

Abstract

The characteristics of endogenously determined sharing rules and the group-size paradox are studied in a model of group contest with the following features: (i) The prize has mixed private-public good characteristics. (ii) Groups can differ in marginal cost of effort and their membership size. (iii) In each group the members decide how much effort to put without observing the sharing rules of the other groups. It is shown that endogenous determination of group sharing rules completely eliminates the group-size paradox, i.e. a larger group always attains a higher winning probability than a smaller group, unless the prize is purely private. In addition, an interesting pattern of equilibrium group sharing rules is revealed: The group attaining the lower winning probability is the one choosing the rule giving higher incentives to the members.

Suggested Citation

  • Nitzan, Shmuel & Ueda, Kaoru, 2011. "Prize sharing in collective contests," European Economic Review, Elsevier, vol. 55(5), pages 678-687, June.
    • Handle: RePEc:eee:eecrev:v:55:y:2011:i:5:p:678-687
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    More about this item

    Keywords

    Collective contest Mixed public-good prize Endogenous sharing rules The group-size paradox;

    JEL classification:

    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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