Using a Simple Contest to Illustrate Mechanism Design

21 Pages Posted: 6 Jun 2010

See all articles by Calvin Blackwell

Calvin Blackwell

College of Charleston - School of Business

Date Written: June 2, 2010

Abstract

This paper describes a simple classroom activity that illustrates how economic theory can be used for mechanism design. The rules for a set of contests are presented; the results typically obtained from these contests illustrate how the prize structure can be manipulated in order to produce a particular outcome. Specifically, this activity is designed to show how changing the prize structure can impact both the contestants' average efforts and the effort level of the hardest working contestant. The activity can be run in a 50-minute class, has instructions that fit on a single piece of paper, and although it can be run in large classes, requires only six students.

Keywords: Classroom experiment, contest, mechanism design

JEL Classification: A22, C72, C92

Suggested Citation

Blackwell, Calvin, Using a Simple Contest to Illustrate Mechanism Design (June 2, 2010). Available at SSRN: https://ssrn.com/abstract=1621342 or http://dx.doi.org/10.2139/ssrn.1621342

Calvin Blackwell (Contact Author)

College of Charleston - School of Business ( email )

Department of Economics
66 George Street
Charleston, SC 29424
United States
843-953-7836 (Phone)
843-953-5697 (Fax)

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