Discussion paper

DP16308 Optimal Feedback in Contests

We derive an optimal dynamic contest for environments where the principal monitors effort through a coarse, binary performance measure and chooses prize-allocation and termination rules together with a real-time feedback policy. The optimal contest takes a stark cyclical form: contestants are kept fully apprised of their own successes, and at the end of each fixed-length cycle, if at least one agent has succeeded, the contest ends and the prize is shared equally among all successful agents regardless of when they succeeded; otherwise, the designer informs all contestants that nobody has yet succeeded and the contest resets.


Ely, J, G Georgiadis, S Khorasani and L Rayo (2021), ‘DP16308 Optimal Feedback in Contests‘, CEPR Discussion Paper No. 16308. CEPR Press, Paris & London. https://cepr.org/publications/dp16308