Optimal Feedback in Contests

37 Pages Posted: 14 Jul 2021

Date Written: June 2021

Abstract

We derive an optimal dynamic contest for environments where the principal monitors effort through a coarse, binary performance measure and chooses prize-allocation and termination rules together with a real-time feedback policy. The optimal contest takes a stark cyclical form: contestants are kept fully apprised of their own successes, and at the end of each fixed-length cycle, if at least one agent has succeeded, the contest ends and the prize is shared equally among all successful agents regardless of when they succeeded; otherwise, the designer informs all contestants that nobody has yet succeeded and the contest resets.

Suggested Citation

Ely, Jeffrey and Georgiadis, George and Moghadas Khorasani, Sina and Rayo, Luis, Optimal Feedback in Contests (June 2021). CEPR Discussion Paper No. DP16308, Available at SSRN: https://ssrn.com/abstract=3886781

Jeffrey Ely (Contact Author)

Northwestern University

2001 Sheridan Road
Evanston, IL 60208
United States

George Georgiadis

Northwestern University - Department of Management & Strategy ( email )

Kellogg School of Management
2001 Sheridan Road
Evanston, IL 60208
United States

HOME PAGE: http://www.kellogg.northwestern.edu/faculty/georgiadis/index.html

Sina Moghadas Khorasani

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

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

Luis Rayo

Kellogg School of Management ( email )

Kellogg School of Management
2001 Sheridan Road
Evanston, IL 60208
United States

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