Multi-Prize Contests as Incentive Mechanisms for the Provision of Public Goods with Heterogenous Agents

29 Pages Posted: 18 Dec 2008

See all articles by Martin Kolmar

Martin Kolmar

University of St. Gallen - Institute of Economy and the Environment (IWOe-HSG); CESifo (Center for Economic Studies and Ifo Institute)

Dana Sisak

Erasmus University Rotterdam (EUR) - Department of Economics; Tinbergen Institute

Date Written: October 16, 2008

Abstract

We analyze if and how multi-prize Tullock contests can be used to guarantee efficient contributions to a public good when agents are heterogenous both with respect to the costs of production of the public good and with respect to the utility from its consumption. With two types of individuals, efficiency can be guaranteed if the following conditions are met: (i) the contest designer can use at least two prizes different from zero, (ii) there is a sufficient number of individuals of each type or types are sufficiently similar and (iii) the reservation utility of the individuals resulting from non-participation is sufficiently low. For a large class of problems it turns out that the optimal prize structure is not monotonic.

Keywords: Public Goods, Contests

JEL Classification: D74, H41, H70, K42

Suggested Citation

Kolmar, Martin and Sisak, Dana, Multi-Prize Contests as Incentive Mechanisms for the Provision of Public Goods with Heterogenous Agents (October 16, 2008). U. of St. Gallen Law & Economics Working Paper No. 2008-26. Available at SSRN: https://ssrn.com/abstract=1316275 or http://dx.doi.org/10.2139/ssrn.1316275

Martin Kolmar (Contact Author)

University of St. Gallen - Institute of Economy and the Environment (IWOe-HSG) ( email )

Varnb├╝elstrasse 14
CH-9000 St. Gallen
Switzerland
+41 (0)71 224 25 35 (Phone)
+41 (0)71 224 23 02 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Dana Sisak

Erasmus University Rotterdam (EUR) - Department of Economics ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Register to save articles to
your library

Register

Paper statistics

Downloads
97
Abstract Views
630
rank
272,471
PlumX Metrics