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The beauty of "bigness": On optimal design of multi-winner contests

Listed author(s):
  • Fu, Qiang
  • Lu, Jingfeng

This paper examines the variation in total effort expended by participants when prizes are awarded in a grand contest as opposed to a number of subcontests. When contestants are homogeneous, under a mild and plausible condition (regular contest technology), a grand contest generates more effort than any set of subcontests. When no restrictions are placed on the contest technology, the results further demonstrate an "increasing-return-to-scale" property such that each individual responds to a proportional increase in the number of contestants and the number of each prize by increasing individual effort. Therefore, when a collection of identical subcontests forms a grand contest, the total effort always increases and the grand contest leads to a higher rent-dissipation rate. Our results apply to a wide variety of competitive activities, such as high-profile sports (e.g., diving and gymnastics in the Olympic Games), the internal labor market and the "quota" system for public resource allocation.

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Article provided by Elsevier in its journal Games and Economic Behavior.

Volume (Year): 66 (2009)
Issue (Month): 1 (May)
Pages: 146-161

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Handle: RePEc:eee:gamebe:v:66:y:2009:i:1:p:146-161
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622836

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  1. Benny Moldovanu & Aner Sela, 2001. "The Optimal Allocation of Prizes in Contests," American Economic Review, American Economic Association, vol. 91(3), pages 542-558, June.
  2. Moldovanu, Benny & Sela, Aner, 2006. "Contest architecture," Journal of Economic Theory, Elsevier, vol. 126(1), pages 70-96, January.
  3. Benny Moldovanu & Aner Sela & Xianwen Shi, 2007. "Contests for Status," Journal of Political Economy, University of Chicago Press, vol. 115, pages 338-363.
  4. Roman Inderst & Holger Müller & Karl Wärneryd, 2005. "Influence costs and hierarchy," Economics of Governance, Springer, vol. 6(2), pages 177-197, July.
  5. Amegashie, J Atsu, 2000. "Some Results on Rent-Seeking Contests with Shortlisting," Public Choice, Springer, vol. 105(3-4), pages 245-253, December.
  6. Fu, Qiang & Lu, Jingfeng, 2007. "Unifying Contests: from Noisy Ranking to Ratio-Form Contest Success Functions," MPRA Paper 6679, University Library of Munich, Germany.
  7. Szymanski, Stefan & Valletti, Tommaso M., 2005. "Incentive effects of second prizes," European Journal of Political Economy, Elsevier, vol. 21(2), pages 467-481, June.
  8. Stergios Skaperdas, 1996. "Contest success functions (*)," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 7(2), pages 283-290.
  9. McFadden, Daniel, 1974. "The measurement of urban travel demand," Journal of Public Economics, Elsevier, vol. 3(4), pages 303-328, November.
  10. Yates, Andrew J. & Heckelman, Jac C., 2001. "Rent-setting in multiple winner rent-seeking contests," European Journal of Political Economy, Elsevier, vol. 17(4), pages 835-852, November.
  11. Barut, Yasar & Kovenock, Dan, 1998. "The symmetric multiple prize all-pay auction with complete information," European Journal of Political Economy, Elsevier, vol. 14(4), pages 627-644, November.
  12. Clark, Derek J & Riis, Christian, 1996. "A Multi-winner Nested Rent-Seeking Contest," Public Choice, Springer, vol. 87(1-2), pages 177-184, April.
  13. Clark, Derek J. & Riis, Christian, 1998. "Influence and the discretionary allocation of several prizes," European Journal of Political Economy, Elsevier, vol. 14(4), pages 605-625, November.
  14. Gradstein, Mark, 1998. "Optimal contest design: volume and timing of rent seeking in contests," European Journal of Political Economy, Elsevier, vol. 14(4), pages 575-585, November.
  15. Clark, Derek J & Riis, Christian, 1998. "Competition over More Than One Prize," American Economic Review, American Economic Association, vol. 88(1), pages 276-289, March.
  16. Glazer, Amihai & Hassin, Refael, 1988. "Optimal Contests," Economic Inquiry, Western Economic Association International, vol. 26(1), pages 133-143, January.
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