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The optimal prize structure of symmetric Tullock contests

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  • Schweinzer, Paul
  • Segev, Ella

Abstract

We show that the optimal prize structure of symmetric n-player Tullock tournaments assigns the entire prize pool to the winner, provided that a symmetric pure strategy equilibrium exists. If such an equilibrium fails to exist under the winner-take-all structure, we construct the optimal prize structure which improves existence conditions by dampening efforts. If no such optimal equilibrium exists, no symmetric pure strategy equilibrium induces positive efforts.

Suggested Citation

  • Schweinzer, Paul & Segev, Ella, 2008. "The optimal prize structure of symmetric Tullock contests," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 250, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  • Handle: RePEc:trf:wpaper:250
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Tournaments; Incentive structures; Rent seeking;
    All these keywords.

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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