Contingent Prizes in Dynamic Contests

Jorge Lemus and Guillermo Marshall

RAND Journal of Economics, 2025, vol. 56, issue 4, 476-493

Abstract: Firms and government agencies increasingly use online contests to find solutions to problems. These contests allow players to make multiple attempts, and their progress is tracked on a real‐time public leaderboard. Although the contests are dynamic, contest sponsors miss the opportunity to dynamically shape players' incentives, as they award the entire prize pool based only on players' final rankings. We propose the use of contingent prizes that depend on the game's history to incentivize players throughout the contest. We present evidence from two methodologies—a structural model and an RCT—showing that contingent prizes can significantly improve contest outcomes.

Date: 2025
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https://doi.org/10.1111/1756-2171.70019

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