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Incentive effects of second prizes

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  • Szymanski, Stefan
  • Valletti, Tommaso M.

Abstract

Most of the contest literature deals with first prizes; this paper deals with the optimality of second prizes. We show that, in a three-person contest where one contestant is very strong, a second prize can be optimal from the point of view of eliciting maximum effort from every contestant. We also consider the desirability of second prizes from the point of view of competitive balance, which matters for contests such as sports competitions.
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Suggested Citation

  • Szymanski, Stefan & Valletti, Tommaso M., 2005. "Incentive effects of second prizes," European Journal of Political Economy, Elsevier, vol. 21(2), pages 467-481, June.
    • Handle: RePEc:eee:poleco:v:21:y:2005:i:2:p:467-481
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    More about this item

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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