Dividing the Spoils: Strategic Prize Allocation in Team Contests

Zhonghong Kuang, Jingfeng Lu and Yiyao Zhu

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Abstract: Rival teams compete through battles and reward members only after team victory. We study how team managers allocate victory-contingent reward budgets across players to maximize their teams' winning probabilities in a majoritarian contest. Under a regularity condition on battle technologies, the allocation game has a unique pure-strategy equilibrium. Despite differences in budgets and player costs across teams and technologies across battles, both managers choose the same normalized reward schedule, a property we call reward schedule alignment. Each battle's share is proportional to discriminatory power, closeness, and pivotality. With precommitted rewards, allocations and team-winning probabilities are independent of battle order.

Date: 2026-05, Revised 2026-07
New Economics Papers: this item is included in nep-gth, nep-mic and nep-spo
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