Optimal Contest Design When Policing Damaging Behavior

Scott M. Gilpatric and Ye Hong ()
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Scott M. Gilpatric: Haslam College of Business, The University of Tennessee, Knoxville, TN 37996, USA
Ye Hong: Department of Economics, University of Arkansas, Fayetteville, AR 72701, USA

Games, 2023, vol. 14, issue 3, 1-22

Abstract: We consider the design of a contest in which the prize may motivate not only productive efforts, but also some damaging aggressive behavior by contestants. The organizer must choose prizes and an enforcement regime defined as a limit on how much aggressiveness will be tolerated and the probability of inspection. When the value of contestants’ output is low, it may be optimal to motivate much less effort than first best because the prize spread necessary to induce higher effort necessitates a high level of enforcement, which is not worth the cost. On the other hand, when the output value is sufficiently high, it becomes optimal to offer a high prize spread to motivate substantial but still below first-best effort, with costly enforcement then being employed to constrain damaging aggressive behavior. Additionally, a less accurate inspection technology is associated with a tighter limit on aggressive behavior, and “zero tolerance” can be optimal if the aggressive behavior has no value.

Keywords: contest design; tournaments; misconduct; marginal deterrence (search for similar items in EconPapers)
JEL-codes: C C7 C70 C71 C72 C73 (search for similar items in EconPapers)
Date: 2023
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