The effort-maximizing contest with heterogeneous prizes
We establish the effort-maximizing rule of allocating heterogeneous prizes when contestants privately observe their effort efficiencies. With ex ante symmetric players and increasing virtual effort efficiency, an all pay auction maximizes the total expected effort. •We study effort-maximizing contes...
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Published in | Economics letters Vol. 125; no. 3; pp. 422 - 425 |
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Main Authors | , |
Format | Journal Article |
Language | English |
Published |
Amsterdam
Elsevier B.V
01.12.2014
Elsevier Science Ltd |
Subjects | |
Online Access | Get full text |
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Summary: | We establish the effort-maximizing rule of allocating heterogeneous prizes when contestants privately observe their effort efficiencies. With ex ante symmetric players and increasing virtual effort efficiency, an all pay auction maximizes the total expected effort.
•We study effort-maximizing contest design with heterogeneous prizes.•Contestants’ effort efficiencies are their private information.•An all pay auction maximizes expected total effort under regularity condition.•Any division of a grand contest leads to lower expected total effort.•An increasing return to scale effect prevails in all pay auctions. |
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Bibliography: | ObjectType-Article-1 SourceType-Scholarly Journals-1 ObjectType-Feature-2 content type line 23 |
ISSN: | 0165-1765 1873-7374 |
DOI: | 10.1016/j.econlet.2014.10.026 |