SFB 504 discussion paper
Department of Economics, University of Mannheim, Germany
Seminargebäude A5, D-68131 Mannheim
Ben Gurion University
Departement of Economics, P.O.Box 653, Beer-Sheva 84105, Israel
- A contest architecture specifies how the prize sum is split among several prizes, and how the contestants (who are here privately informed about their abilities) are split among several sub-contests. We compare the performance of such schemes to that of grand winner-take-all contests from the point of view of designers who maximize either the expected total effort or the expected highest effort. An important explanatory variable is the form of the agents` cost functions. The analysis is based on simple but powerful results about various stochastic dominance relations among order statistics and functions thereof.
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