Discussion Paper Details

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Title: Prize allocation and incentives in team contests

Author(s): Benot SY Crutzen, Sabine Flamand and Nicolas Sahuguet

Publication Date: December 2017


Programme Area(s): Industrial Organization and Public Economics

Abstract: We study a contest between teams that compete for multiple indivisible prizes. Team output is a CES function of all the team members' efforts. We use a generalized Tullock contest success function to allocate prizes between teams. We study how different intra-team prize allocation rules impact team output. We consider an egalitarian rule that gives all members the same chance of receiving a prize, and a list rule that sets ex-ante the order in which members receive a prize. The convexity of the cost of effort function and the complementarity of individual efforts determine which rule maximizes team output and success. Our results speak to many real world situations, such as elections, contests for the allocation of local public goods and the internal organization of firms.

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Bibliographic Reference

Crutzen, B, Flamand, S and Sahuguet, N. 2017. 'Prize allocation and incentives in team contests'. London, Centre for Economic Policy Research.