Multiple-Prize Contests the Optimal Allocation of Prizes

33 Pages Posted: 17 Jan 2009

See all articles by Dana Sisak

Dana Sisak

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

Abstract

Multiple-prize contests are important in various fields of economics ranging from rent seeking over labour economics, patent and R&D races to tendering for (governmental) projects. Hence it is crucial to understand the incentive effects of multiple prizes on effort investment. This survey attempts to outline, compare and evaluate the results from the literature. While a first prize always results in a positive incentive to invest effort, second and later prizes lead to ambiguous effects. Depending on the objective function, the characteristics of the individuals and the type of contest a different prize allocation is optimal.

Suggested Citation

Sisak, Dana, Multiple-Prize Contests the Optimal Allocation of Prizes. Journal of Economic Surveys, Vol. 23, Issue 1, pp. 82-114, February 2009. Available at SSRN: https://ssrn.com/abstract=1327428 or http://dx.doi.org/10.1111/j.1467-6419.2008.00557.x

Dana Sisak (Contact Author)

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

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