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Prize Sharing in Collective Contests

  • Shmuel Nitzan

    ()

    (Bar-Ilan University)

  • Kaoru Ueda

    (Nanzan University)

The characteristics of endogenously determined sharing rules and the group-size paradox are studied in a model of group contest with the following features: (i) The prize has mixed private-public good characteristics. (ii) Groups can differ in marginal cost of effort and their membership size. (iii) In each group the members decide how much effort to put without observing the sharing rules of the other groups. We provide simple characterizations of the relationship between group characteristics, performance of the competing groups (winning probability and per capita expected utility) and the type of sharing rules they select. Interestingly, richer and more efficient groups or groups with larger valuation of the prize tend to be more equalitarian. We also clarify under what circumstances such tendency is due to larger membership.

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File URL: http://www.biu.ac.il/soc/ec/wp/2010-08.pdf
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Paper provided by Bar-Ilan University, Department of Economics in its series Working Papers with number 2010-08.

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Date of creation: Apr 2010
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Handle: RePEc:biu:wpaper:2010-08
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  1. Riaz, Khalid & Shogren, Jason F & Johnson, Stanley R, 1995. " A General Model of Rent Seeking for Public Goods," Public Choice, Springer, vol. 82(3-4), pages 243-59, March.
  2. Baik, Kyung Hwan & Lee, Sanghack, 2007. "Collective rent seeking when sharing rules are private information," European Journal of Political Economy, Elsevier, vol. 23(3), pages 768-776, September.
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  11. Richard Cornes & Roger Hartley, 2002. "Asymmetric Contests with General Technologies," Keele Economics Research Papers KERP 2002/22, Centre for Economic Research, Keele University.
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  15. Baik, Kyung Hwan & Lee, Sanghack, 2001. "Strategic Groups and Rent Dissipation," Economic Inquiry, Western Economic Association International, vol. 39(4), pages 672-84, October.
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  17. Baik, Kyung Hwan & Kim, In-Gyu & Na, Sunghyun, 2001. "Bidding for a group-specific public-good prize," Journal of Public Economics, Elsevier, vol. 82(3), pages 415-429, December.
  18. Kaoru Ueda, 2002. "Oligopolization in collective rent-seeking," Social Choice and Welfare, Springer, vol. 19(3), pages 613-626.
  19. Lee, Sanghack, 1995. " Endogenous Sharing Rules in Collective-Group Rent-Seeking," Public Choice, Springer, vol. 85(1-2), pages 31-44, October.
  20. Cornes, Richard & Hartley, Roger, 2003. " Risk Aversion, Heterogeneity and Contests," Public Choice, Springer, vol. 117(1-2), pages 1-25, October.
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