The Optimal Allocation of Prizes in Contests

Benny Moldovanu () and Aner Sela

American Economic Review, 2001, vol. 91, issue 3, 542-558

Abstract: We study a contest with multiple, nonidentical prizes. Participants are privately informed about a parameter (ability) affecting their costs of effort. The contestant with the highest effort wins the first prize, the contestant with the second-highest effort wins the second prize, and so on until all the prizes are allocated. The contest's designer maximizes expected effort. When cost functions are linear or concave in effort, it is optimal to allocate the entire prize sum to a single "first" prize. When cost functions are convex, several positive prizes may be optimal.

JEL-codes: D44 D72 D82 (search for similar items in EconPapers)
Date: 2001
Note: DOI: 10.1257/aer.91.3.542
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Citations: View citations in EconPapers (592)

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Related works:
Chapter: The Optimal Allocation of Prizes in Contests (2008)
Working Paper: The optimal allocation of prizes in contests (1999)
Working Paper: The Optimal Allocation of Prizes in Contests (1999)
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