Working Paper: CEPR ID: DP16308
Authors: Jeffrey Ely; George Georgiadis; Sina Khorasani; Luis Rayo
Abstract: We derive an optimal dynamic contest for environments where the principal monitors effort through a coarse, binary performance measure and chooses prize-allocation and termination rules together with a real-time feedback policy. The optimal contest takes a stark cyclical form: contestants are kept fully apprised of their own successes, and at the end of each fixed-length cycle, if at least one agent has succeeded, the contest ends and the prize is shared equally among all successful agents regardless of when they succeeded; otherwise, the designer informs all contestants that nobody has yet succeeded and the contest resets.
Keywords: No keywords provided
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| cyclicalegalitarian contest structure (D72) | maximizes the probability of awarding the prize (D44) |
| cyclicalegalitarian contest structure (D72) | ensures zero rents for agents (L85) |
| cyclicalegalitarian contest structure (D72) | transforms 100% of the prize into effort (D44) |
| cyclicalegalitarian contest structure (D72) | maximizes total effort (L21) |
| cyclicalegalitarian contest structure (D72) | expected number of successes (C29) |
| cyclicalegalitarian contest structure (D72) | outperforms winner-takes-all contests (C72) |