First and Second Prizes in Imperfectly Discriminating Contests

Stefan Szymanski and Tommaso Valletti

No 4484, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Most of the contest literature deals with first prizes; this Paper deals with the optimality of second prizes. We show that in a three-person contest where one contestant is very strong a second prize can be optimal from the point of view of eliciting maximum effort from every contestant. Moreover, we consider the desirability of second prizes from the point of view of competitive balance, which matters for contests such as sports competitions.

Keywords: Imperfectly discriminating (logit) contests; Prizes (search for similar items in EconPapers)
JEL-codes: D43 L13 (search for similar items in EconPapers)
Date: 2004-07
References: Add references at CitEc
Citations: View citations in EconPapers (9)

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