Orchestrating Contests with Heterogeneous Participants

Rudi Stracke

No 1218, Economics Working Paper Series from University of St. Gallen, School of Economics and Political Science

Abstract: This paper compares static one-stage and dynamic two-stage contests with heterogeneous participants. I find that aggregate effort provision (AEP) is strictly higher in the dynamic than in the static format in any interior equilibrium with heterogeneous contestants. Since AEP is identical in both formats in case of homogeneity, this finding suggests that the well-known (adverse) incentive effect of heterogeneity crucially depends on the structure of the competition – the effect is lower in dynamic than in static formats. The paper also shows that heterogeneity between contestants is crucial to explain recent empirical evidence on the comparison of different contest structures.

Keywords: Multi-Stage Contest; Heterogeneity; Contest Design (search for similar items in EconPapers)
JEL-codes: D23 D72 J33 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2012-08
New Economics Papers: this item is included in nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:usg:econwp:2012:18

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