Punishment versus Reward in All-pay Contests with Perfect Information

Jason Lepore (), Alison Mackey () and Tyson Mackey ()
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Jason Lepore: Department of Economics, Orfalea College of Business, Califonia Polytechnic State University
Alison Mackey: Department of Management, Orfalea College of Business, Califonia Polytechnic State University
Tyson Mackey: Department of Management, Orfalea College of Business, Califonia Polytechnic State University

Economics Bulletin, 2012, vol. 32, issue 4, 3090-3097

Abstract: We study when costly punishment induces higher expected effort than prizes in all-pay contests with perfect information. Punishment outperforms rewards if the number of players in the contest is large enough or if the principal can easily administer effective punishment. If the marginal cost of punishment is equal to the marginal cost of reward, then punishment induces more effort in all symmetric contests.

Keywords: contest; all-pay auction; punishment (search for similar items in EconPapers)
JEL-codes: C7 (search for similar items in EconPapers)
Date: 2012-11-07
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Citations: View citations in EconPapers (1)

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