IDEAS home Printed from https://ideas.repec.org/a/spr/joecth/v18y2001i3p711-744.html
   My bibliography  Save this article

Contests where there is variation in the marginal productivity of effort

Author

Listed:
  • Nirvikar Singh

    () (Economics Department, University of California, Santa Cruz, CA 95064, USA)

  • Donald Wittman

    () (Economics Department, University of California, Santa Cruz, CA 95064, USA)

Abstract

We provide a characterization of participants' behavior in a contest or tournament where the marginal productivity of effort varies across contestants and individual productivity is private information. We then consider the optimal design of such a contest. We first analyze contestant behavior for the usual type of contest, where the highest output wins. Abilities need not be independently distributed. We demonstrate that there is a unique symmetric equilibrium output function, that output is increasing in ability, and that marginal effort is increasing in ability, while effort decreases when the cost of effort increases. Next we consider the case where the highest output need not win, with independently distributed abilities. We analyze the contest designer's decisions in choosing contest rules optimal from her perspective. We show that the output produced, probability of winning, and contest designer's expected revenue are generally increasing in contestants' ability. We examine the relationship between the marginal cost of producing output and marginal utility per dollar of the net award for winning.

Suggested Citation

  • Nirvikar Singh & Donald Wittman, 2001. "Contests where there is variation in the marginal productivity of effort," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 18(3), pages 711-744.
  • Handle: RePEc:spr:joecth:v:18:y:2001:i:3:p:711-744
    Note: Received: July 30, 1998; revised version: August 7, 2000
    as

    Download full text from publisher

    File URL: http://link.springer.de/link/service/journals/00199/papers/1018003/10180711.pdf
    Download Restriction: Access to the full text of the articles in this series is restricted

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Curry Philip A. & Mongrain Steeve, 2009. "Deterrence in Rank-Order Tournaments," Review of Law & Economics, De Gruyter, vol. 5(1), pages 723-740, December.
    2. Dmitry Ryvkin, 2007. "Tullock contests of weakly heterogeneous players," Public Choice, Springer, vol. 132(1), pages 49-64, July.
    3. repec:elg:eechap:15325_5 is not listed on IDEAS
    4. David Perez Castrillo & David Wettstein, 2014. "Discrimination in a new model of contests with two-sided asymmetric information," Working Papers 1407, Ben-Gurion University of the Negev, Department of Economics.
    5. David Pérez-Castrillo & David Wettstein, 2012. "Innovation Contests," Working Papers 654, Barcelona Graduate School of Economics.
    6. Marco Runkel, 2003. "Optimal Contest Design when the Designer’s Payoff Depends on Competitive Balance," CESifo Working Paper Series 1009, CESifo Group Munich.
    7. Kai Konrad, 2012. "Information alliances in contests with budget limits," Public Choice, Springer, vol. 151(3), pages 679-693, June.
    8. Gil Epstein & Igal Milchtaich & Shmuel Nitzan & Mordechai Schwarz, 2007. "Ambiguous political power and contest efforts," Public Choice, Springer, vol. 132(1), pages 113-123, July.
    9. Giuseppe Dari-Mattiacci & Eric Langlais & Bruno Lovat & Francesco Parisi, 2013. "Asymmetries in Rent-Seeking," EconomiX Working Papers 2013-5, University of Paris Nanterre, EconomiX.
    10. Daniel Lee, 2008. "Going once, going twice, sold! The committee assignment process as an all-pay auction," Public Choice, Springer, vol. 135(3), pages 237-255, June.
    11. Ando, Munetomo, 2004. "Division of a contest with identical prizes," Journal of the Japanese and International Economies, Elsevier, vol. 18(2), pages 282-297, June.
    12. Junichiro Ishida, 2006. "Seniority bias in a tournament," Review of Economic Design, Springer;Society for Economic Design, vol. 10(2), pages 143-164, August.
    13. Jörg Franke & Christian Kanzow & Wolfgang Leininger & Alexandra Schwartz, 2013. "Effort maximization in asymmetric contest games with heterogeneous contestants," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 52(2), pages 589-630, March.
    14. Munetomo Ando, 2004. "Overconfidence in Economic Contests," Econometric Society 2004 Far Eastern Meetings 708, Econometric Society.

    More about this item

    Keywords

    Optimal contest; Contest design; Asymmetric information; Correlated abilities.;

    JEL classification:

    • D3 - Microeconomics - - Distribution
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:joecth:v:18:y:2001:i:3:p:711-744. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla) or (Rebekah McClure). General contact details of provider: http://www.springer.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.