Splitting contests

Edwin Leuven
Hessel Oosterbeek
Bas van der Klaauw

September 2010

In this paper we investigate how heterogeneous agents choose among contests with different prizes. We show that if the number of agents is sufficiently small, multiple equilibria can arise. These include perfect-sorting (high-ability agents compete for high prize and low-ability agents for low prize), mixed strategies and reversed sorting. We show that total effort always decreases compared to a single contest. However, splitting the contest may increase the effort of low-ability agents.

(Click here to download the PDF file containing the working paper)

Last updated: August 23, 2011.