Status classification by lottery contests

Aner Sela

European Economic Review, 2025, vol. 173, issue C

Abstract: We study the optimal design of status classifications in organizational structures under the assumption that agents in a lottery (Tullock) contest care about their relative position. For each such a contest with any number of status categories that is smaller than or equal to the number of agents, we provide sufficient conditions for the optimal partition, which is the distribution of agents among the status categories that maximizes the agents’ symmetric equilibrium effort. We show that, for any number of status categories, in the optimal partition of status categories, the higher the status category, the more agents are included in it. However, in the optimal partition of status categories, a higher status category may not contain more agents than a lower status category when agents receive monetary rewards in addition to the payoff from their relative position (status).

Keywords: Lottery contests; Status categories (search for similar items in EconPapers)
JEL-codes: D44 D72 D82 J31 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:173:y:2025:i:c:s001429212500011x

DOI: 10.1016/j.euroecorev.2025.104961

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