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Motivating over Time: Dynamic Win Effects in Sequential Contests

Author

Listed:
  • Clark, Derek J.

    (Tromsø University Business School)

  • Nilssen, Tore

    (Dept. of Economics, University of Oslo)

  • Sand, Jan Yngve

    (Tromsø University Business School)

Abstract

In this paper we look at motivation over time by setting up a dynamic contest model where winning the fi…rst contest yields an advantage in the second contest. The win advantage introduces an asymmetry into the competition that we …find reduces the expected value to the contestants of being in the game, whilst it increases the efforts exerted. Hence it may seem that a win advantage is advantageous for an effort maximizing contest designer, whereas in expectation it will not be bene…cial for the players. We also show that the principal should distribute a majority of the total prize mass to the second contest. With ex ante asymmetry, the effect of the win advantage on the effort in the second contest depends on how disadvantaged the laggard is. A large disadvantage at the outset implies that as the win advantage increases, total effort for the disadvantaged …firm is reduced as the discouragement effect dominates the catching-up effect. If the inital disadvantage is not signi…ficant, then the catching-up effect dominates and the laggard increases its total effort.

Suggested Citation

  • Clark, Derek J. & Nilssen, Tore & Sand, Jan Yngve, 2012. "Motivating over Time: Dynamic Win Effects in Sequential Contests," Memorandum 28/2012, Oslo University, Department of Economics.
    • Handle: RePEc:hhs:osloec:2012_028
    as

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    File URL: https://www.sv.uio.no/econ/english/research/unpublished-works/working-papers/pdf-files/2012/memo-28-2012.pdf
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    References listed on IDEAS

    as
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    8. Derek Clark & Tore Nilssen, 2013. "Learning by doing in contests," Public Choice, Springer, vol. 156(1), pages 329-343, July.
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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Klein, Arnd Heinrich & Schmutzler, Armin, 2017. "Optimal effort incentives in dynamic tournaments," Games and Economic Behavior, Elsevier, vol. 103(C), pages 199-224.
    2. Feng, Xin & Lu, Jingfeng, 2018. "How to split the pie: Optimal rewards in dynamic multi-battle competitions," Journal of Public Economics, Elsevier, vol. 160(C), pages 82-95.
    3. Malin Arve & Olga Chiappinelli, 2021. "The Role of Budget Constraints in Sequential Elimination Tournaments," Scandinavian Journal of Economics, Wiley Blackwell, vol. 123(4), pages 1059-1087, October.
    4. Klein, Arnd Heinrich & Schmutzler, Armin, 2021. "Incentives and motivation in dynamic contests," Journal of Economic Behavior & Organization, Elsevier, vol. 189(C), pages 194-216.
    5. Barbieri, Stefano & Serena, Marco, 2022. "Biasing dynamic contests between ex-ante symmetric players," Games and Economic Behavior, Elsevier, vol. 136(C), pages 1-30.
    6. Clark, Derek J. & Nilssen , Tore & Sand, Jan Yngve, 2014. "Keep on Fighting: Dynamic Win Effects in an All-Pay Auction," Memorandum 23/2014, Oslo University, Department of Economics.

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    More about this item

    Keywords

    dynamic contest; win advantage; prize division;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

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