CARROTS AND STICKS: PRIZES AND PUNISHMENTS IN CONTESTS

CARROTS AND STICKS: PRIZES AND PUNISHMENTS IN CONTESTS

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 iden...

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Veröffentlicht in:Economic inquiry 2012-04, Vol.50 (2), p.453-462
Hauptverfasser: MOLDOVANU, BENNY, SELA, ANER, SHI, XIANWEN
Format: Artikel
Sprache:eng
Schlagworte:
Ability
Analysis
Awards (Prizes)
Competition
Contests
Design
Design optimization
Designers
Game theory
Prizes
Punishment
Sanctions
Studies
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Beschreibung
Zusammenfassung: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. (JEL D44, D82, J31, J41)
ISSN:0095-2583
1465-7295
DOI:10.1111/j.1465-7295.2010.00322.x