Derek J. Clark
Motivating over Time: Dynamic Win Effects in Sequential Contests
(), Tore Nilssen
() and Jan Yngve Sand
Abstract: In this paper we look at motivation over time by setting
up a dynamic contest model where winning the fi…rst contest yields an
advantage in the second contest. The win advantage introduces an asymmetry
into the competition that we …find reduces the expected value to the
contestants of being in the game, whilst it increases the efforts exerted.
Hence it may seem that a win advantage is advantageous for an effort
maximizing contest designer, whereas in expectation it will not be
bene…cial for the players. We also show that the principal should
distribute a majority of the total prize mass to the second contest. With
ex ante asymmetry, the effect of the win advantage on the effort in the
second contest depends on how disadvantaged the laggard is. A large
disadvantage at the outset implies that as the win advantage increases,
total effort for the disadvantaged …firm is reduced as the discouragement
effect dominates the catching-up effect. If the inital disadvantage is not
signi…ficant, then the catching-up effect dominates and the laggard
increases its total effort.
Keywords: dynamic contest; win advantage; prize division; (follow links to similar papers)
JEL-Codes: D72; D74; (follow links to similar papers)
21 pages, September 12, 2012
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