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Competition among contests
Author(s) -
Azmat Ghazala,
Möller Marc
Publication year - 2009
Publication title -
the rand journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.687
H-Index - 108
eISSN - 1756-2171
pISSN - 0741-6261
DOI - 10.1111/j.1756-2171.2009.00087.x
Subject(s) - contest , competition (biology) , incentive , sensitivity (control systems) , set (abstract data type) , microeconomics , economics , race (biology) , computer science , political science , sociology , engineering , programming language , electronic engineering , law , biology , gender studies , ecology
When several contests compete for the participation of a common set of players, a contest's allocation of prizes not only induces incentive effects but also participation effects. Our model predicts that an increase in the sensitivity with which contest outcomes depend on players' efforts makes flatter prize structures more attractive to participants. In equilibrium, contests that aim to maximize the number of participants will award multiple prizes if and only if this sensitivity is sufficiently high. Moreover, the prize awarded to the winner is decreasing in the contests' sensitivity. We provide empirical evidence from professional road running using race–distance as a measure of sensitivity. We show that steeper prize structures are more attractive to top‐ranked runners in longer, that is, less sensitive, races. In line with our theory, longer races do in fact offer steeper prize structures.