Ability grouping in contests

Jun Xiao

Journal of Mathematical Economics, 2023, vol. 104, issue C

Abstract: This paper considers a planner who can group participants into different competitions for performance ranking and design prize structure in each competition in order to maximize the weighted total performance subject to a positive performance requirement. There are possible spillovers in each competition, because a participant may benefit from others’ performance in the same competition. We show that, whatever the type-specific weights are, separating – assigning participants with the same ability together – is superior to mixing – assigning participants with different abilities together. Moreover, we also characterize the associated optimal prize structures.

Keywords: All-pay; Contest; Mixing; Tracking (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:mateco:v:104:y:2023:i:c:s0304406822001185

DOI: 10.1016/j.jmateco.2022.102792

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