Direct and Structural Discrimination in Contests

Yosef Mealem and Shmuel Nitzan

No 4518, CESifo Working Paper Series from CESifo

Abstract: This paper evaluates direct and structural discrimination as a means of increasing efforts in the most widely studied contests. We establish that a designer who maximizes efforts subject to a balanced-budget constraint prefers dual discrimination, namely, change of the contestants’ prize valuations as well as bias of the impact of their efforts. Optimal twofold discrimination is often superior to any single mode of discrimination under any logit CSF. Our main result establishes that, surprisingly, from the designer’s point of view, dual discrimination can yield the maximal possible efforts when it is applied to the prototypical simple logit CSF. In this case it yields almost the highest valuation of the contested prize.

Keywords: contest design; balanced-budget-constraint; direct discrimination; structural discrimination; extreme dual discrimination; contest success function (search for similar items in EconPapers)
JEL-codes: D70 D72 D74 D78 (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_4518

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