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

Gil Epstein, Yosef Mealem () and Shmuel Nitzan
Additional contact information
Yosef Mealem: Netanya Academic College

No 7032, IZA Discussion Papers from Institute of Labor Economics (IZA)

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 designer's payoff under the optimal lottery is equal to his expected payoff under the optimal all-pay auction.

Keywords: endogenous lottery; discrimination; efforts (revenue) maximization; contest design; all-pay auction (search for similar items in EconPapers)
JEL-codes: D70 D71 D72 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2012-11
New Economics Papers: this item is included in nep-gth and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published - published in: Economics and Politics, 2013, 25(1), 48–60

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https://docs.iza.org/dp7032.pdf (application/pdf)

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 (2011)
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