Optimal Feedback in Contests

Research output: Contribution to journalArticlepeer-review

2 Scopus citations

Abstract

We obtain optimal dynamic contests for environments where the designer monitors effort through coarse, binary signals - Poisson successes - and aims to elicit maximum effort, ideally in the least amount of time possible, given a fixed prize. The designer has a vast set of contests to choose from, featuring termination and prize-allocation rules together with real-time feedback for the contestants. Every effort-maximizing contest (which also maximizes total expected successes) has a history-dependent termination rule, a feedback policy that keeps agents fully apprised of their own success, and a prize-allocation rule that grants them, in expectation, a time-invariant share of the prize if they succeed. Any contest that achieves this effort in the shortest possible time must in addition be what we call second chance: once a pre-specified number of successes arrive, the contest enters a countdown phase where contestants are given one last chance to succeed.

Original languageEnglish (US)
Pages (from-to)2370-2394
Number of pages25
JournalReview of Economic Studies
Volume90
Issue number5
DOIs
StatePublished - Oct 1 2023

Keywords

  • Agency problem
  • Contests
  • Incentives
  • Information design
  • Moral hazard

ASJC Scopus subject areas

  • Economics and Econometrics

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