TITLE:
Prize Allocation in Contests with Size Effect through Prizes
AUTHORS:
Sanghack Lee, Shi Young Lee
KEYWORDS:
Contest; Prize Allocation; Endogenous Prize Share; Size Effect
JOURNAL NAME:
Theoretical Economics Letters,
Vol.2 No.2,
May
24,
2012
ABSTRACT: We examine prize allocation in contests in which the number of contenders affects prizes. The government allocates a fixed prize between two groups of contenders. The prize share of each group is determined endogenously through the inter-group share contest. Then, the contenders in each group respectively compete for the prize. Examining prize allocation in such contests, we obtain the following results. The contenders expend more resources when they cooperate than when they contribute non-cooperatively in the inter-group share contest. The size effect through prizes increases the prize share of the larger group. The larger group can even obtain the larger share if the size effect through prizes is sufficiently strong.