Contest Divisioning

24 Pages Posted: 5 May 2021 Last revised: 16 May 2022

See all articles by Philip Brookins

Philip Brookins

University of South Carolina

Paan Jindapon

The University of Alabama

Date Written: May 1, 2021

Abstract

In this paper, we ask a fundamental design question in the theory of contests: Should contestants and reward money be pooled into a single grand contest, or should they be divided into parallel subcontests? We theoretically explore optimal divisioning using Tullock’s lottery contest framework and compare the performance, i.e., total effort generated, of the grand contest to the performance of contest divisioning based on players' ability or risk attitude. When all players are risk neutral, contest divisioning is never optimal. However, given that players are heterogeneous in either ability or risk attitude, we find that contest divisioning is optimal when the degrees of absolute risk aversion are sufficiently large. Importantly, our results support the widespread use of divisioning seen in practice.

Keywords: contest design, divisioning, cost heterogeneity, risk attitude heterogeneity

JEL Classification: C72, D72, D81

Suggested Citation

Brookins, Philip and Jindapon, Paan, Contest Divisioning (May 1, 2021). Available at SSRN: https://ssrn.com/abstract=3838754 or http://dx.doi.org/10.2139/ssrn.3838754

Philip Brookins (Contact Author)

University of South Carolina ( email )

Department of Economics
1014 Greene St
Columbia, SC 29208
United States
8037773603 (Phone)

HOME PAGE: http://philipbrookins.com

Paan Jindapon

The University of Alabama ( email )

Department of Economics
Box 870224
Tuscaloosa, AL 35487
United States

HOME PAGE: http://https://pjindapon.people.ua.edu/

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