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The Distribution of Talent Across Contests

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  • Ghazala Azmat
  • Marc Möller

Abstract

Do the contests with the largest prizes attract the most able contestants? To what extent do contestants avoid competition? We show that the distribution of abilities is crucial in determining contest choice. Complete sorting exists only when the proportion of high†ability contestants is small. As this proportion increases, high†ability contestants shy away from competition and sorting decreases, making reverse sorting a possibility. We test our theoretical predictions with a large panel data set containing contest choice over 20 years. We use exogenous variation in the participation of highly able competitors to provide evidence for the relationship among prizes, competition and sorting.

Suggested Citation

  • Ghazala Azmat & Marc Möller, 2018. "The Distribution of Talent Across Contests," Economic Journal, Royal Economic Society, vol. 128(609), pages 471-509, March.
    • Handle: RePEc:wly:econjl:v:128:y:2018:i:609:p:471-509
    DOI: 10.1111/ecoj.12426
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    Cited by:

    1. Amegashie, J. Atsu, 2019. "Quantity-cum-quality contests," European Journal of Political Economy, Elsevier, vol. 58(C), pages 289-297.
    2. Bas J. Dietzenbacher & Aleksei Y. Kondratev, 2023. "Fair and Consistent Prize Allocation in Competitions," Management Science, INFORMS, vol. 69(6), pages 3319-3339, June.
    3. John Morgan & Dana Sisak & Felix Várdy, 2018. "The Ponds Dilemma," Economic Journal, Royal Economic Society, vol. 128(611), pages 1634-1682, June.
    4. Aleksei Chernulich & Romain Gauriot & Daehong Min, 2023. "Endogenous Tracking: Sorting and Peer Effects," Working Papers 20230084, New York University Abu Dhabi, Department of Social Science, revised Jan 2023.
    5. Wang, Zhen & Vukina, Tomislav, 2017. "Sorting into Contests: Evidence from Production Contracts," ARE Working Papers 262930, North Carolina State University, Department of Agricultural and Resource Economics.
    6. Luke Boosey & Philip Brookins & Dmitry Ryvkin, 2020. "Information Disclosure in Contests with Endogenous Entry: An Experiment," Management Science, INFORMS, vol. 66(11), pages 5128-5150, November.
    7. Wei-Torng Juang & Guang-Zhen Sun & Kuo-Chih Yuan, 2020. "A model of parallel contests," International Journal of Game Theory, Springer;Game Theory Society, vol. 49(2), pages 651-672, June.
    8. Liu, Bin & Lu, Jingfeng, 2023. "Optimal orchestration of rewards and punishments in rank-order contests," Journal of Economic Theory, Elsevier, vol. 208(C).
    9. Martin Grossmann, 2021. "Entry regulations and optimal prize allocation in parallel contests," Review of Economic Design, Springer;Society for Economic Design, vol. 25(4), pages 289-316, December.
    10. Deutscher, Christian & Gürtler, Marc & Gürtler, Oliver & DeVaro, Jed, 2020. "Firm choice and career success - theory and evidence," European Economic Review, Elsevier, vol. 127(C).

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    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact

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