Prize sharing in collective contests

Shmuel Nitzan; Kaoru Ueda

doi:10.1016/j.euroecorev.2010.09.005

Prize sharing in collective contests

Shmuel Nitzan
, Kaoru Ueda

Department of Economics

Nanzan University

Research output: Contribution to journal › Article › peer-review

56 Scopus citations

Abstract

The characteristics of endogenously determined sharing rules and the group-size paradox are studied in a model of group contest with the following features: (i) The prize has mixed private-public good characteristics. (ii) Groups can differ in marginal cost of effort and their membership size. (iii) In each group the members decide how much effort to put without observing the sharing rules of the other groups. It is shown that endogenous determination of group sharing rules completely eliminates the group-size paradox, i.e. a larger group always attains a higher winning probability than a smaller group, unless the prize is purely private. In addition, an interesting pattern of equilibrium group sharing rules is revealed: The group attaining the lower winning probability is the one choosing the rule giving higher incentives to the members.

Original language	English
Pages (from-to)	678-687
Number of pages	10
Journal	European Economic Review
Volume	55
Issue number	5
DOIs	https://doi.org/10.1016/j.euroecorev.2010.09.005
State	Published - Jun 2011

Bibliographical note

Funding Information:
We are very much indebted to two anonymous referees and an associate editor for their most useful suggestions. Financial support from the Adar Foundation of the Economics Department at Bar-Ilan University is gratefully acknowledged by Shmuel Nitzan. Kaoru Ueda is grateful for the funding by the Nitto Foundation, Aichi.

Funding

We are very much indebted to two anonymous referees and an associate editor for their most useful suggestions. Financial support from the Adar Foundation of the Economics Department at Bar-Ilan University is gratefully acknowledged by Shmuel Nitzan. Kaoru Ueda is grateful for the funding by the Nitto Foundation, Aichi.

Funders
Adar Foundation of the Economics Department at Bar-Ilan University
Nitto Foundation
Shmuel Nitzan

Keywords

Collective contest
Endogenous sharing rules
Mixed public-good prize
The group-size paradox

Access to Document

10.1016/j.euroecorev.2010.09.005

Cite this

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AB - The characteristics of endogenously determined sharing rules and the group-size paradox are studied in a model of group contest with the following features: (i) The prize has mixed private-public good characteristics. (ii) Groups can differ in marginal cost of effort and their membership size. (iii) In each group the members decide how much effort to put without observing the sharing rules of the other groups. It is shown that endogenous determination of group sharing rules completely eliminates the group-size paradox, i.e. a larger group always attains a higher winning probability than a smaller group, unless the prize is purely private. In addition, an interesting pattern of equilibrium group sharing rules is revealed: The group attaining the lower winning probability is the one choosing the rule giving higher incentives to the members.

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KW - Mixed public-good prize

KW - The group-size paradox

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Prize sharing in collective contests

Abstract

Bibliographical note

Funding

Keywords

Access to Document

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