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First and Second Prizes in Imperfectly Discriminating Contests

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  • Szymanski, Stefan
  • Valletti, Tommaso

Abstract

Most of the contest literature deals with first prizes; this Paper deals with the optimality of second prizes. We show that in a three-person contest where one contestant is very strong a second prize can be optimal from the point of view of eliciting maximum effort from every contestant. Moreover, we consider the desirability of second prizes from the point of view of competitive balance, which matters for contests such as sports competitions.

Suggested Citation

  • Szymanski, Stefan & Valletti, Tommaso, 2004. "First and Second Prizes in Imperfectly Discriminating Contests," CEPR Discussion Papers 4484, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:4484
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    Citations

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    Cited by:

    1. Frode Meland & Odd Straume, 2007. "Outsourcing in contests," Public Choice, Springer, vol. 131(3), pages 315-331, June.
    2. Cohen, Chen & Sela, Aner, 2008. "Allocation of prizes in asymmetric all-pay auctions," European Journal of Political Economy, Elsevier, vol. 24(1), pages 123-132, March.
    3. Sela, Aner, 2011. "Best-of-three all-pay auctions," Economics Letters, Elsevier, vol. 112(1), pages 67-70, July.
    4. Stefan Szymanski, 2010. "The Economic Design of Sporting Contests," Palgrave Macmillan Books, in: The Comparative Economics of Sport, chapter 1, pages 1-78, Palgrave Macmillan.
    5. Stefan Szymanski & Stefan Késenne, 2010. "Competitive Balance and Gate Revenue Sharing in Team Sports," Palgrave Macmillan Books, in: The Comparative Economics of Sport, chapter 7, pages 229-243, Palgrave Macmillan.
    6. Guido Ascari & Philippe Gagnepain, 2007. "Evaluating Rent Dissipation in the Spanish Football Industry," Journal of Sports Economics, , vol. 8(5), pages 468-490, October.
    7. BALLIAUW, Matteo & VERLINDEN, Thomas & VAN DEN SPIEGEL, Tomas & VAN HECKE, Jani, 2017. "Towards a sustainable financial model for professional tennis players," Working Papers 2017006, University of Antwerp, Faculty of Business and Economics.

    More about this item

    Keywords

    Imperfectly discriminating (logit) contests; Prizes;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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