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The Distribution of Talent across Contests

Author

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  • Ghazala Azmat
  • Marc Möller

Abstract

Do the contests with the largest prizes attract the most able contestants? Do contestants avoid competition? In this paper we show that the distribution of abilities plays a crucial role in determining contest choice. Positive sorting exist only when the proportion of high ability contestants is sufficiently small. As this pro- portion increases, contestants shy away from competition and sorting decreases. Eventually, contests with smaller prizes attract stronger participants, i.e. there exists negative sorting. We test our theoretical predictions using a large panel data set containing contest choice over three decades. We use exogenous variation in the participation of highly able competitors to provide empirical evidence for the relationship between prizes and sorting.

Suggested Citation

  • Ghazala Azmat & Marc Möller, 2012. "The Distribution of Talent across Contests," Working Papers 600, Barcelona Graduate School of Economics.
  • Handle: RePEc:bge:wpaper:600
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    contests; prize structure; ability; sorting;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • 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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