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The Ponds Dilemma

Author

Listed:
  • John Morgan
  • Dana Sisak
  • Felix Várdy

Abstract

Is it better to be a big fish in a small pond or a small fish in a big pond? To find out, we study self†selection into contests. Our simple model predicts that: (i) entry into the big pond – in terms of show†up fees, number or value of prizes – is non†monotonic in ability; (ii) entry into the more meritocratic pond is likewise non†monotonic, exhibiting two interior extrema and disproportionately attracting very low ability types; and (iii) changes in rewards can produce unexpected effects, e.g. higher show†up fees may lower entry, while higher prizes or more meritocracy may lower the average ability of entrants.

Suggested Citation

  • John Morgan & Dana Sisak & Felix Várdy, 2018. "The Ponds Dilemma," Economic Journal, Royal Economic Society, vol. 128(611), pages 1634-1682, June.
    • Handle: RePEc:wly:econjl:v:128:y:2018:i:611:p:1634-1682
    DOI: 10.1111/ecoj.12473
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    Citations

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    Cited by:

    1. Boris Ginzburg, 2021. "Optimal Price Of Entry Into A Competition," Economic Inquiry, Western Economic Association International, vol. 59(1), pages 280-286, January.
    2. Zak, Uri & Avrahami, Judith & Kareev, Yaakov, 2019. "The lions–foxes dilemma: The case of chess tournaments," Journal of Economic Psychology, Elsevier, vol. 75(PB).
    3. Ghazala Azmat & Marc Möller, 2018. "The Distribution of Talent Across Contests," Economic Journal, Royal Economic Society, vol. 128(609), pages 471-509, March.
    4. Ghazala Azmat & Marc Möller, 2018. "The Distribution of Talent Across Contests," Economic Journal, Royal Economic Society, vol. 128(609), pages 471-509, March.
    5. 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.
    6. Liu, Bin & Lu, Jingfeng, 2023. "Optimal orchestration of rewards and punishments in rank-order contests," Journal of Economic Theory, Elsevier, vol. 208(C).
    7. Ghazala Azmat & Marc Möller, 2016. "The Distribution of Talent across Contests Feedback in Higher Education," Working Papers 789, Queen Mary University of London, School of Economics and Finance.
    8. Deutscher, Christian & Gürtler, Marc & Gürtler, Oliver & DeVaro, Jed, 2020. "Firm choice and career success - theory and evidence," European Economic Review, Elsevier, vol. 127(C).
    9. Amegashie, J. Atsu, 2019. "Quantity-cum-quality contests," European Journal of Political Economy, Elsevier, vol. 58(C), pages 289-297.
    10. Christian Ewerhart & Marco Serena, 2025. "On the (Im-)Possibility of Representing Probability Distributions as a Difference of I.I.D. Noise Terms," Mathematics of Operations Research, INFORMS, vol. 50(1), pages 390-409, February.
    11. Morgan, John & Tumlinson, Justin & Várdy, Felix, 2022. "The limits of meritocracy," Journal of Economic Theory, Elsevier, vol. 201(C).
    12. Martin Grossmann, 2021. "Correction to: Entry regulations and optimal prize allocation in parallel contests," Review of Economic Design, Springer;Society for Economic Design, vol. 25(4), pages 317-318, December.

    More about this item

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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