An Equilibrium Analysis of Competing Contests

University of California, San Diego, Rady School of Management Working Paper No 3485193

Darden Business School Working Paper No. 3485193

42 Pages Posted: 15 Nov 2019 Last revised: 12 Aug 2020

See all articles by Konstantinos I. Stouras

Konstantinos I. Stouras

UCD, Michael Smurfit Graduate Business School

Sanjiv Erat

University of California, San Diego (UCSD) - Rady School of Management

Kenneth C. Lichtendahl Jr.

University of Virginia - Darden School of Business

Date Written: November 11, 2017

Abstract

Crowdsourcing platforms typically take a passive approach and let solvers self-select which (if any) of the concurrently running contests they wish to participate into. Thus, firms which set prizes and organize contests on these platforms are competing among themselves (for solver participation and effort). We model this competition among contests, and solve for the equilibrium solver participation and characterize the equilibrium among the firms. Next we compare the outcomes to a setting where the platform can “nudge” the solvers toward a particular contest (i.e., platforms can recommend a contest for a given solver, but cannot enforce participation). Our main results reveal that solvers' self-sorting into contests hurts the solvers, the firms and the platform. Thus, platform policies to nudge solver entry improve overall welfare.

Keywords: crowdsourcing; nudges; incentives; multiple contests; endogenous participation

Suggested Citation

Stouras, Konstantinos I. and Erat, Sanjiv and Lichtendahl Jr., Kenneth C., An Equilibrium Analysis of Competing Contests (November 11, 2017). University of California, San Diego, Rady School of Management Working Paper No 3485193, Darden Business School Working Paper No. 3485193, Available at SSRN: https://ssrn.com/abstract=3485193 or http://dx.doi.org/10.2139/ssrn.3485193

Konstantinos I. Stouras (Contact Author)

UCD, Michael Smurfit Graduate Business School ( email )

Carysfort Ave
Blackrock
Ireland

Sanjiv Erat

University of California, San Diego (UCSD) - Rady School of Management ( email )

9500 Gilman Drive
Rady School of Management
La Jolla, CA 92093
United States

HOME PAGE: http://www.rady.ucsd.edu/faculty/directory/erat/

Kenneth C. Lichtendahl Jr.

University of Virginia - Darden School of Business

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

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