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Prize-allocation rules in generalized team contests

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Abstract

We consider a generalized team contest, in which the team’s effort is produced with a general technology represented by a concave homothetic function of team members’ contributions. Furthermore, we assume that the value of the contest’s prize depends on total effort exerted in the contest. We prove the existence of positive-effort Nash equilibrium for this generalized team contest under an arbitrary profile of the teams’ prize-allocation rules, and derive a simple characterization of the team-effort-maximizing prize-sharing rule. Although our basic model assumes that each individual in a group has constant marginal effort costs, it is possible to extend the results to the case where team members’ effort cost functions have increasing marginal costs with a constant elasticity.

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Acknowledgements

We are indebted to Shmuel Nitzan and two anonymous referees for their useful comments and suggestions.

Funding

Japan Society for the Promotion of the Sciences Grants-in-Aid for Scientific Research (JSPSKAKENHI) Grant Number JP21K01550.

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Authors and Affiliations

  1. Faculty of Economics, Hosei University, 4342 Aihara-machi, Machida-shi, Tokyo, 194-0298, Japan

    Katsuya Kobayashi

  2. Department of Economics, Boston College, 140 Commonwealth Ave., Chestnut Hill, MA, 02467, USA

    Hideo Konishi

  3. Faculty of Economics, Nanzan University, 18 Yamazato-cho Showa-ku, Nagoya, Aichi, 466-0824, Japan

    Kaoru Ueda

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  1. Katsuya Kobayashi
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  2. Hideo Konishi
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  3. Kaoru Ueda
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Correspondence to Kaoru Ueda.

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Kobayashi, K., Konishi, H. & Ueda, K. Prize-allocation rules in generalized team contests. Econ Theory (2024). https://doi.org/10.1007/s00199-024-01559-8

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