Optimal contests with incomplete information and convex effort costs

• 成果类型: Article
• 署名作者: Zhang, Mengxi
• 署名单位: University of Bonn
• 刊物名称: THEORETICAL ECONOMICS
• ISSN/ISSBN: 1933-6837
• DOI: 10.3982/TE4259
• 发表日期: 2024-01-01
• 页码: 95-129
• 关键词: Optimal contest; incomplete information; mechanism design; D44; D82

摘要

I investigate the design of effort-maximizing mechanisms when agents have both private information and convex effort costs, and the designer has a fixed prize budget. I first demonstrate that it is always optimal for the designer to utilize a contest with as many participants as possible. Further, I identify a necessary and sufficient condition for the winner-takes-all prize structure to be optimal. When this condition fails, the designer may prefer to award multiple prizes of descending sizes. I also provide a characterization of the optimal prize allocation rule for this case. Finally, I illustrate how the optimal prize distribution evolves as the contest size grows.