This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

Contest Design with Stochastic Performance

  • René Kirkegaard
American Economic Journal: Microeconomics
vol. 15, no. 1, February 2023
(pp. 201-38)
Download Full Text PDF

Abstract

This paper studies optimal contest design in contests with noisy performance. Here, contest design is a team moral hazard problem that endogenizes the assignment rule that maps performance profiles into winning probabilities. The optimal design features endogenous standards for eligibility, and the number of prizes that are awarded may be stochastic. Generally, one group of agents is identified as "first claimants" of prizes, contingent on performance exceeding a threshold of excellence. However, which group wins prizes more often depends on the designer's objective function and the performance technologies. Finally, the approach derives endogenous, microfounded, and fully optimal contest success functions.

Citation

Kirkegaard, René. 2023. "Contest Design with Stochastic Performance." American Economic Journal: Microeconomics, 15 (1): 201-38. DOI: 10.1257/mic.20200422

Additional Materials

JEL Classification

  • D44 Auctions
  • D82 Asymmetric and Private Information; Mechanism Design
There are no comments for this article.
Login to Comment