Optimal rewards in contests

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Optimal rewards in contests

Please use this identifier to cite or link to this item: http://hdl.handle.net/10036/26992


Title: Optimal rewards in contests
Author: Cohen, Chen
Kaplan, Todd R.
Sela, Aner
Publisher: Centre for Economic Policy Research
Date Issued: 2004-10
URI: http://hdl.handle.net/10036/26992
Abstract: We study all-pay contests under incomplete information where the reward is a function of the contestant's type and effort. We analyze the optimal reward for the designer when the reward is either multiplicatively separable or additively separable in effort and type. In the multiplicatively separable environment, the optimal reward is always positive while in the additively separable environment it may also be negative. In both environments, depending on the designer's utility, the optimal reward may either increase or decrease in the contestants' effort. Finally, in both environments, the designer's payoff depends only upon the expected value of the effort-dependent rewards and not the number of rewards.
Type: Working Paper
Keywords: All-pay auctionsOptimal designContests
Funders/Sponsor: Leverhulme Foundation (Grant RF/7/2006/0325)

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