Carrots and Sticks: Prizes and Punishments in Contests

Benny Moldovanu (), Aner Sela and Xianwen Shi

No 6770, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We study optimal contest design in situations where the designer can reward high performance agents with positive prizes and punish low performance agents with negative prizes. We link the optimal prize structure to the curvature of distribution of abilities in the population. In particular, we identify conditions under which, even if punishment is costly, punishing the bottom is more effective than rewarding the top in eliciting effort input. If punishment is costless, we study the optimal number of punishments in the contest.

Keywords: All-pay auctions; Contests; Order statistics; Punishments (search for similar items in EconPapers)
JEL-codes: D44 D82 J31 J41 (search for similar items in EconPapers)
Date: 2008-04
New Economics Papers: this item is included in nep-cta
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: CARROTS AND STICKS: PRIZES AND PUNISHMENTS IN CONTESTS (2012)
Working Paper: Carrots and Sticks: Prizes and Punishments in Contests (2010)
Working Paper: Carrots and Sticks: Prizes and Punishments in Contests (2008)
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