Optimal Contest Design: A General Approach

Joint with Shuo Liu (Guanghua School of Management, Peking University ) and Nick Netzer (University of Zurich). 

Abstract: We consider the design of contests for n agents when the principal can choose both the prize profile and the contest success function. Our framework includes Tullock contests, Lazear-Rosen tournaments and all-pay contests as special cases, among others. We show that the optimal contest has an intermediate degree of competitiveness in the contest success function, and a minimally competitive prize profile with n−1 identical prizes. The optimum can be achieved with a nested Tullock contest. We extend the model to allow for imperfect performance measurement and for heterogeneous agents. We relate our results to a recent literature which has asked similar questions but has typically focused on the design of either the prize profile or the contest success function. 

https://www.igorletina.com/
Link to the paper: https://edit.cms.unibe.ch/unibe/portal/fak_wiso/b_dep_vwl/a_inst_vwl/content/e195818/e195991/e556277/e965461/dp2011_ger.pdf?preview=preview

Schedule (Israel time):

11:30 - 11:45 - Gathering and free talk

11:45-12:45 - research presentation

To view the seminar recording, click here.