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Punishment versus Reward in All-pay Contests with Perfect Information

Author

Listed:
  • Jason J Lepore

    (Department of Economics, Orfalea College of Business, Califonia Polytechnic State University)

  • Alison Mackey

    (Department of Management, Orfalea College of Business, Califonia Polytechnic State University)

  • Tyson B Mackey

    (Department of Management, Orfalea College of Business, Califonia Polytechnic State University)

Abstract

We study when costly punishment induces higher expected effort than prizes in all-pay contests with perfect information. Punishment outperforms rewards if the number of players in the contest is large enough or if the principal can easily administer effective punishment. If the marginal cost of punishment is equal to the marginal cost of reward, then punishment induces more effort in all symmetric contests.

Suggested Citation

  • Jason J Lepore & Alison Mackey & Tyson B Mackey, 2012. "Punishment versus Reward in All-pay Contests with Perfect Information," Economics Bulletin, AccessEcon, vol. 32(4), pages 3090-3097.
    • Handle: RePEc:ebl:ecbull:eb-12-00167
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    File URL: http://www.accessecon.com/Pubs/EB/2012/Volume32/EB-12-V32-I4-P296.pdf
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    References listed on IDEAS

    as
    1. Michael R. Baye & Dan Kovenock & Casper G. Vries, 1996. "The all-pay auction with complete information," Springer Books, in: Roger D. Congleton & Arye L. Hillman & Kai A. Konrad (ed.), 40 Years of Research on Rent Seeking 1, pages 209-223, Springer.
    2. Benny Moldovanu & Aner Sela & Xianwen Shi, 2012. "Carrots And Sticks: Prizes And Punishments In Contests," Economic Inquiry, Western Economic Association International, vol. 50(2), pages 453-462, April.
    3. Clark, Derek J & Riis, Christian, 1998. "Competition over More Than One Prize," American Economic Review, American Economic Association, vol. 88(1), pages 276-289, March.
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    Cited by:

    1. Tyson B. Mackey & Alison Mackey & Lisa Jones Christensen & Jason J. Lepore, 2022. "Inducing Corporate Social Responsibility: Should Investors Reward the Responsible or Punish the Irresponsible?," Journal of Business Ethics, Springer, vol. 175(1), pages 59-73, January.

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    More about this item

    Keywords

    contest; all-pay auction; punishment;
    All these keywords.

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

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