Motivating over Time: Dynamic Win Effects in Sequential Contests
In this paper we look at motivation over time by setting up a dynamic contest model where winning the fi…rst contest yields an advantage in the second contest. The win advantage introduces an asymmetry into the competition that we …find reduces the expected value to the contestants of being in the game, whilst it increases the efforts exerted. Hence it may seem that a win advantage is advantageous for an effort maximizing contest designer, whereas in expectation it will not be bene…cial for the players. We also show that the principal should distribute a majority of the total prize mass to the second contest. With ex ante asymmetry, the effect of the win advantage on the effort in the second contest depends on how disadvantaged the laggard is. A large disadvantage at the outset implies that as the win advantage increases, total effort for the disadvantaged …firm is reduced as the discouragement effect dominates the catching-up effect. If the inital disadvantage is not signi…ficant, then the catching-up effect dominates and the laggard increases its total effort.
|Date of creation:||12 Sep 2012|
|Date of revision:|
|Contact details of provider:|| Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway|
Phone: 22 85 51 27
Fax: 22 85 50 35
Web page: http://www.oekonomi.uio.no/indexe.html
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Katz, Michael L & Shapiro, Carl, 1986. "Technology Adoption in the Presence of Network Externalities," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 822-41, August.
- Konrad, Kai A., 2009. "Strategy and Dynamics in Contests," OUP Catalogue, Oxford University Press, number 9780199549603, May.
- Konrad, Kai A. & Kovenock, Dan, 2006.
Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems
122, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
- Konrad, Kai A. & Kovenock, Dan, 2006. "Multi-Battle Contests," CEPR Discussion Papers 5645, C.E.P.R. Discussion Papers.
- Konrad, Kai A. & Kovenock, Dan, 2006. "Multi-battle contests," Purdue University Economics Working Papers 1187, Purdue University, Department of Economics.
- Konrad, Kai A. & Kovenock, Dan, 2009. "Multi-battle contests," Munich Reprints in Economics 22084, University of Munich, Department of Economics.
- Pablo Casas-Arce & F. Asís Martínez-Jerez, 2009. "Relative Performance Compensation, Contests, and Dynamic Incentives," Management Science, INFORMS, vol. 55(8), pages 1306-1320, August.
- Xiaotong Li, 2005. "Cheap Talk and Bogus Network Externalities in the Emerging Technology Market," Marketing Science, INFORMS, vol. 24(4), pages 531-543, October.
- Ajay Kalra & Mengze Shi, 2001. "Designing Optimal Sales Contests: A Theoretical Perspective," Marketing Science, INFORMS, vol. 20(2), pages 170-193, December.
- J. Clark, Derek & Nilssen, Tore, 2010.
"Learning by Doing in Contests,"
09/2010, Oslo University, Department of Economics.
- Kevin J. Boudreau & Nicola Lacetera & Karim R. Lakhani, 2011. "Incentives and Problem Uncertainty in Innovation Contests: An Empirical Analysis," Management Science, INFORMS, vol. 57(5), pages 843-863, May.
- Christian Terwiesch & Yi Xu, 2008. "Innovation Contests, Open Innovation, and Multiagent Problem Solving," Management Science, INFORMS, vol. 54(9), pages 1529-1543, September.
- Mehlum, Halvor & Moene, Karl, 2008.
"King of the Hill: Positional Dynamics in Contests,"
06/2008, Oslo University, Department of Economics.
- Martin Grossmann & Helmut M. Dietl, 2009.
"Investment Behaviour in a Two-Period Contest Model,"
Journal of Institutional and Theoretical Economics (JITE),
Mohr Siebeck, Tübingen, vol. 165(3), pages 401-417, September.
- Martin Grossmann & Helmut Dietl, 2007. "Investment Behaviour in a Two Period Contest Model," Working Papers 0069, University of Zurich, Institute for Strategy and Business Economics (ISU).
- Skaperdas, Stergios, 1996.
"Contest Success Functions,"
Springer;Society for the Advancement of Economic Theory (SAET), vol. 7(2), pages 283-90, February.
When requesting a correction, please mention this item's handle: RePEc:hhs:osloec:2012_028. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Magnus Gabriel Aase)The email address of this maintainer does not seem to be valid anymore. Please ask Magnus Gabriel Aase to update the entry or send us the correct email address
If references are entirely missing, you can add them using this form.