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Entry into Winner-Take-All and Proportional-Prize Contests: An Experimental Study

  • Timothy N. Cason

    ()

    (Department of Economics, Krannert School of Management, Purdue University)

  • William A. Masters

    ()

    (Department of Agricultural Economics, Purdue University)

  • Roman M. Sheremeta

    ()

    (Argyros School of Business and Economics, Chapman University)

This experiment compares the performance of two contest designs: a standard winnertake- all tournament with a single fixed prize, and a novel proportional-payment design in which that same prize is divided among contestants by their share of total achievement. We find that proportional prizes elicit more entry and more total achievement than the winner-take-all tournament. The proportional-prize contest performs better by limiting the degree to which heterogeneity among contestants discourages weaker entrants, without altering the performance of stronger entrants. These findings could inform the design of contests for technological and other improvements, which are widely used by governments and philanthropic donors to elicit more effort on targeted economic and technological development activities.

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File URL: http://www.chapman.edu/ESI/wp/Winner-Take-AllContests-Sheremeta.pdf
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Paper provided by Chapman University, Economic Science Institute in its series Working Papers with number 10-10.

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Length: 27 pages
Date of creation: Apr 2010
Date of revision:
Handle: RePEc:chu:wpaper:10-10
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