Favoritism in asymmetric contests

Rene Kirkegaard
2010 Proceedings of the Behavioral and Quantitative Game Theory on Conference on Future Directions - BQGT '10  
I examine a contest with identity-dependent rules in which contestants are privately informed and ex ante heterogenous. A contestant may suffer from a handicap or benefit from a head start. The former reduces the contestant's score by a fixed percentage; the latter is an additive bonus. Although total effort increases if the weak contestant is favored with a head start, the optimal use of handicaps is not as clear-cut. Depending on the nature of the asymmetry, it may or may not be optimal to
more » ... ot be optimal to handicap the strong contestant. Moreover, it is generally optimal to combine the two instruments. For instance, when contestants are sufficiently heterogenous the weak contestant should be given both a head start and a handicap. It may also be possible to induce higher effort and at the same time make both contestants better off ex ante. JEL Classification Numbers: C72, D44, D82.
doi:10.1145/1807406.1807451 dblp:conf/bqgt/Kirkegaard10 fatcat:lgew3vvvsjexjkl6rc23na5m3q