The Ponds Dilemma

49 Pages Posted: 5 Jun 2018

See all articles by John Morgan

John Morgan

University of California, Berkeley - Economic Analysis & Policy Group

Dana Sisak

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

Felix Várdy

International Monetary Fund (IMF)

Multiple version iconThere are 2 versions of this paper

Date Written: June 2018

Abstract

Is it better to be a big fish in a small pond or a small fish in a big pond? To find out, we study self‐selection into contests. Our simple model predicts that: (i) entry into the big pond – in terms of show‐up fees, number or value of prizes – is non‐monotonic in ability; (ii) entry into the more meritocratic pond is likewise non‐monotonic, exhibiting two interior extrema and disproportionately attracting very low ability types; and (iii) changes in rewards can produce unexpected effects, e.g. higher show‐up fees may lower entry, while higher prizes or more meritocracy may lower the average ability of entrants.

Suggested Citation

Morgan, John and Sisak, Dana and Várdy, Felix, The Ponds Dilemma (June 2018). The Economic Journal, Vol. 128, Issue 611, pp. 1634-1682, 2018. Available at SSRN: https://ssrn.com/abstract=3190736 or http://dx.doi.org/10.1111/ecoj.12473

John Morgan (Contact Author)

University of California, Berkeley - Economic Analysis & Policy Group ( email )

Berkeley, CA 94720
United States
510-642-2669 (Phone)
810-885-5959 (Fax)

HOME PAGE: http://faculty.haas.berkeley.edu/rjmorgan/

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

Felix Várdy

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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