Heterogeneous outside options in contests

Martin Grossmann and Helmut Dietl

European Journal of Political Economy, 2015, vol. 37, issue C, 280-287

Abstract: This article describes a large number of contestants with high and low levels of talent who individually decide to enter a contest or take their heterogeneous outside options. We derive a critical condition for which only high types, only low types or both types participate in the contest. If a contest organizer is worried about the type participating in the contest, then he/she should provide a contest with low noise to attract high types. However, if a contest organizer's objective is to maximize the individual effort, he/she will not necessarily prefer to have the high types in the contest.

Keywords: Contest; Aggregate-taking behavior; Outside option (search for similar items in EconPapers)
JEL-codes: C72 D72 L13 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:poleco:v:37:y:2015:i:c:p:280-287

DOI: 10.1016/j.ejpoleco.2014.09.006

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