The optimal prize structure of symmetric Tullock contests

Paul Schweinzer and Ella Segev ()
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Ella Segev: Department of Economics, University of Bonn, Lennéstraße 37, 53113 Bonn, Germany

No 250, Discussion Papers from SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich

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.

Keywords: Tournaments; Incentive structures; Rent seeking (search for similar items in EconPapers)
JEL-codes: C7 D72 J31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm
Date: 2008-10
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