The optimal prize structure of symmetric Tullock contests

Schweinzer, Paul and Segev, Ella (November 2008): The optimal prize structure of symmetric Tullock contests. SFB/TR 15 Discussion Paper No. 250

Abstract

We show that the optimal prize structure of symmetric n-player Tullock tournaments assigns the entire prize pool to the winner, provided that a symmetric pure strategy equilibrium exists. If such an equilibrium fails to exist under the winner-take-all structure, we construct the optimal prize structure which improves existence conditions by dampening efforts. If no such optimal equilibrium exists, no symmetric pure strategy equilibrium induces positive efforts.

• Item Type: Paper
• Keywords: Tournaments, Incentive structures, Rent seeking
• Faculties: Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems; Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems > A3 - Markt- und Auktionsdesign in komplexen Umgebungen
• Subjects: 300 Social sciences > 330 Economics
• JEL Classification: C7, D72, J31
• Language: English