Scandinavian Working Papers in Economics

Memorandum,
Oslo University, Department of Economics

No 09/2010: Learning by Doing in Contests

Derek J. Clark () and Tore Nilssen ()
Additional contact information
Derek J. Clark: University of Tromsø, Postal: University of Tromsø, NO- 9037 Tromsø, Norway,
Tore Nilssen: Dept. of Economics, University of Oslo, Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway

Abstract: We introduce learning by doing in a dynamic contest. Contestants compete in an early round and can use the experience gained to reduce effort cost in a subsequent contest. A contest designer can decide how much of the prize mass to distribute in the early contest and how much to leave for the later one in order to maximize total efforts. We show how this division affects effort at each stage, and present conditions that characterize the optimal split. The results are indicative of the fact that the designer weakly prefers to leave most of the prize mass for the second contest to reap the gains from the learning by doing effect.

Keywords: Learning by doing; dynamic contest; prize division

JEL-codes: D72; D74

20 pages, May 11, 2010

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Published as
Derek J. Clark and Tore Nilssen, (2013), 'Learning by Doing in Contests', Public Choice, vol 156, pages 329-343

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