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On the optimality of two prizes in asymmetric imperfectly discriminating contests

Publication

Abstract

We examine asymmetric imperfectly discriminating two-prize contests in order to determine when oering two prizes, as opposed to a single prize, is optimal under maximization of the average eort. We present three-person model with heterogeneous contestants, who dier in their relative abilities, and compete for two prizes, possibly of dierent size.

Such a complicated nonlinear problem cannot be treated analytically.