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Reverse Contests

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  • Aner Sela

    (BGU)

Abstract

We study two reverse contests, A and B, with two agents, each of whom has both a linear reward function that increases in the agent's effort and an effort constraint. However, since the effort (output) of the agents has a negative effect on society, if the agents' effort constraints are relatively high, the designer in reverse contest A imposes a punishment such that the agent with the highest effort who caused the greatest damage is punished. Conversely, if the agents' effort constraints are relatively low, in reverse contest B, the designer awards a prize to the agent with the lowest effort who caused the smallest damage. We analyze the behavior of both symmetric and asymmetric agents in both contests A and B. In equilibrium, independent of the levels of the agents' effort constraints, both agents are active and they have positive expected payoffs. Furthermore, the agents might have the same expected payoff regardless of their asymmetric values of the prize/punishment or their asymmetric effort constraints.
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Suggested Citation

  • Aner Sela, 2018. "Reverse Contests," Working Papers 1804, Ben-Gurion University of the Negev, Department of Economics.
    • Handle: RePEc:bgu:wpaper:1804
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    References listed on IDEAS

    as
    1. Benny Moldovanu & Aner Sela, 2008. "The Optimal Allocation of Prizes in Contests," Springer Books, in: Roger D. Congleton & Arye L. Hillman & Kai A. Konrad (ed.), 40 Years of Research on Rent Seeking 1, pages 615-631, Springer.
    2. Michael Baye & Dan Kovenock & Casper Vries, 2012. "Contests with rank-order spillovers," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 51(2), pages 315-350, October.
    3. Cohen, Chen & Levi, Ofer & Sela, Aner, 2019. "All-pay auctions with asymmetric effort constraints," Mathematical Social Sciences, Elsevier, vol. 97(C), pages 18-23.
    4. Chen Cohen & Todd R. Kaplan & Aner Sela, 2008. "Optimal rewards in contests," RAND Journal of Economics, RAND Corporation, vol. 39(2), pages 434-451, June.
    5. 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.
    6. Moldovanu, Benny & Sela, Aner, 2006. "Contest architecture," Journal of Economic Theory, Elsevier, vol. 126(1), pages 70-96, January.
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    8. Michael R. Baye & Dan Kovenock & Casper G. Vries, 2008. "Rigging the lobbying process: An application of the all-pay auction," Springer Books, in: Roger D. Congleton & Kai A. Konrad & Arye L. Hillman (ed.), 40 Years of Research on Rent Seeking 2, pages 331-336, Springer.
    9. Aner Sela, 2012. "Sequential two-prize contests," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 51(2), pages 383-395, October.
    10. Yeon-Koo Che & Ian L. Gale, 2008. "Caps on Political Lobbying," Springer Books, in: Roger D. Congleton & Kai A. Konrad & Arye L. Hillman (ed.), 40 Years of Research on Rent Seeking 2, pages 337-345, Springer.
    11. Konrad, Kai A. & Kovenock, Dan, 2009. "Multi-battle contests," Games and Economic Behavior, Elsevier, vol. 66(1), pages 256-274, May.
    12. 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.
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    Full references (including those not matched with items on IDEAS)

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