The optimal prize structure of symmetric Tullock contests

Paul Schweinzer; Ella Segev

We show that the optimal prize structure of symmetric n-player Tullock tournaments assigns the entire prize pool to the winner, provided that a symmetric pure strategy equilibrium exists. If such an equilibrium fails to exist under the winner-take-all structure, we construct the optimal prize structure which improves existence conditions by dampening efforts. If no such optimal equilibrium exists, no symmetric pure strategy equilibrium induces positive efforts.

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Year of publication:	2008
Authors:	Schweinzer, Paul ; Segev, Ella
Publisher:	München : Sonderforschungsbereich/Transregio 15 Governance and the Efficiency of Economic Systems
Subject:	Tournaments \| Incentive structures \| Rent seeking \| Rent-Seeking \| Spieltheorie \| Game theory \| Wettbewerb \| Competition \| Extensives Spiel \| Extensive form game \| Leistungsanreiz \| Performance incentive \| Anreiz \| Incentives