【主题】On the Optimal Design of Biased Contests
【摘要/Abstract】This paper develops a novel technique to characterize the optimal identity-dependent treatment in contests, which vary the balance of the playing field in the competition. A generalized lottery contest, in general, yields no closed-form equilibrium solutions, which nullifies the usual implicit programming approach in optimal contest design and limits the existing analysis in restricted settings. We propose an alternative approach that allows us to circumvent this difficulty and obtain the optimum in a general setting and toward a wide array of objective functions without solving for the equilibrium explicitly. Our approach applies to broad contexts, and the analysis enabled by the technique generates novel implications on the strategic substance of contest game and its optimal design. With a mild assumption on the objective function, we show that the performance of the contest cannot be further improved by allowing for headstart in addition to multiplicative biases on contestants' effective effort entry. We demonstrate that the conventional wisdom of leveling the playing field, which is obtained in limited settings in previous studies, does not generally hold.