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Discrimination In A Model Of Contests With Incomplete Information About Ability

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  • David Pérez‐Castrillo
  • David Wettstein

Abstract

We study contests with private information and identical contestants, where contestants' efforts and innate abilities generate output of varying qualities. The designer's revenue depends on the quality of the output, and she offers a reward to the contestant achieving the highest quality. We characterize the equilibrium behavior, outcomes, and payoffs for both nondiscriminatory and discriminatory (where the reward is contestant‐dependent) contests. We derive conditions under which the designer obtains a larger payoff when using a discriminatory contest and describe settings, where these conditions are satisfied.

Suggested Citation

  • David Pérez‐Castrillo & David Wettstein, 2016. "Discrimination In A Model Of Contests With Incomplete Information About Ability," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 57(3), pages 881-914, August.
    • Handle: RePEc:wly:iecrev:v:57:y:2016:i:3:p:881-914
    DOI: 10.1111/iere.12179
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    References listed on IDEAS

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    Cited by:

    1. Gian Luigi Albano & Berardino Cesi & Alberto Iozzi, 2023. "Teaching an old dog a new trick: Reserve price and unverifiable quality in repeated procurement," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 32(2), pages 377-399, April.
    2. Bastani, Spencer & Giebe, Thomas & Gürtler, Oliver, 2022. "Simple equilibria in general contests," Games and Economic Behavior, Elsevier, vol. 134(C), pages 264-280.
    3. Kawamori, Tomohiko, 2023. "Complete-rent-dissipation contest design," Economics Letters, Elsevier, vol. 232(C).
    4. Lu, Jingfeng & Wang, Zhewei & Zhou, Lixue, 2022. "Optimal favoritism in contests with identity-contingent prizes," Journal of Economic Behavior & Organization, Elsevier, vol. 196(C), pages 40-50.
    5. Derek J. Clark & Tore Nilssen, 2022. "Fatter or fitter? On rewarding and training in a contest," Economic Inquiry, Western Economic Association International, vol. 60(1), pages 101-120, January.
    6. Pin Gao & Xiaoshuai Fan & Yangguang Huang & Ying-Ju Chen, 2022. "Resource Allocation Among Competing Innovators," Management Science, INFORMS, vol. 68(8), pages 6059-6074, August.
    7. Subhasish M. Chowdhury & Patricia Esteve‐González & Anwesha Mukherjee, 2023. "Heterogeneity, leveling the playing field, and affirmative action in contests," Southern Economic Journal, John Wiley & Sons, vol. 89(3), pages 924-974, January.
    8. Yangguang Huang & Ming He, 2021. "Structural Analysis Of Tullock Contests With An Application To U.S. House Of Representatives Elections," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 62(3), pages 1011-1054, August.
    9. Barbieri, Stefano & Serena, Marco, 2022. "Biasing dynamic contests between ex-ante symmetric players," Games and Economic Behavior, Elsevier, vol. 136(C), pages 1-30.
    10. Zhu, Feng, 2021. "On optimal favoritism in all-pay contests," Journal of Mathematical Economics, Elsevier, vol. 95(C).
    11. Wasser, Cédric & Zhang, Mengxi, 2023. "Differential treatment and the winner's effort in contests with incomplete information," Games and Economic Behavior, Elsevier, vol. 138(C), pages 90-111.
    12. Shelegia, Sandro & Wilson, Chris M., 2022. "Costly participation and default allocations in all-pay contests," MPRA Paper 115027, University Library of Munich, Germany.

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