Competition Among Contests Articles uri icon

authors

  • AZMAT, GHAZALA
  • MÖLLER, MARC

publication date

  • January 2009

start page

  • 743

end page

  • 768

issue

  • 4

volume

  • 40

International Standard Serial Number (ISSN)

  • 0741-6261

Electronic International Standard Serial Number (EISSN)

  • 1756-2171

abstract

  • When several contests compete for the participation of a common set of players, a contest's allocation of prizes not only includes 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.