Competitive Problem Solving and the Optimal Prize Schemes

Toru Suzuki

No 2010-083, Jena Economics Research Papers from Friedrich-Schiller-University Jena

Abstract: Agents compete to solve a problem. Each agent knows own computational capacity as private information and simultaneously chooses either a risky or a safe problem solving method. This paper analyzes the optimal prize schemes from the perspective of the prize designer who wishes to find a solution as quick as possible. It is shown that (i) the winner- take-all scheme can induce excessive risk taking and make problem solving slower (ii) prize schemes with milder competitive pressure induce the optimal risk taking and quicker problem solving.

Keywords: Optimal prize scheme; Risk taking; Problem solving (search for similar items in EconPapers)
JEL-codes: D82 (search for similar items in EconPapers)
Date: 2010-12-02
New Economics Papers: this item is included in nep-cta and nep-mic
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Journal Article: Competitive problem solving and the optimal prize schemes (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:jrp:jrpwrp:2010-083

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