Lotteries vs. All-Pay Auctions in Fair and Biased Contests

Gil Epstein, Yosef Mealem and Shmuel Nitzan

No 2011-29, Working Papers from Bar-Ilan University, Department of Economics

Abstract: The form of contests for a single fixed prize can be determined by a designer who maximizes the contestants' efforts. This paper establishes that, under common knowledge of the two asymmetric contestants' prize valuations, a fair Tullock-type endogenously determined lottery is always superior to an all-pay-auction; it yields larger expected efforts (revenues) for the contest designer. If the contest can be unfair (structural discrimination is allowed), then the optimal lottery cannot be dominated by an all-pay-auction.

Keywords: contest design; efforts (revenue) maximization; discrimination; endogenous lottery; all-pay auction. (search for similar items in EconPapers)
JEL-codes: D70 D71 D72 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2011-11
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Lotteries vs. All-Pay Auctions in Fair and Biased Contests (2013)
Working Paper: Lotteries vs. All-Pay Auctions in Fair and Biased Contests (2012)
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