Working Paper: CEPR ID: DP5132
Authors: Chen Cohen; Aner Sela
Abstract: We study all-pay contests in which there is a positive probability of a tied outcome. We analyse both one-stage contests and multi-stage contests with tie-breaks. We demonstrate that in symmetric two-player contests, the designer does not have an incentive to award a prize in a case of a tie. Consequently, in symmetric multi-stage two-player contests, the designer should allow an unlimited number of tie-breaks until a winner is decided.
Keywords: all-pay auctions; contests
JEL Codes: D44; D72
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| sum of winning probabilities in a tie < 1 (C72) | contest designer does not have an incentive to award a prize in case of a tie (C72) |
| awarding a prize for a tie (D44) | does not affect contestants' efforts (C72) |
| unlimited number of tiebreaks (C78) | maximizes total effort (L21) |
| three-point system in soccer (Z28) | increased total effort exerted by players (Z22) |