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Contests with Linear Externality in Prizes

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Authors
Park, Sung-Hoon; Lee, Sanghack
Issue Date
2019-07
Publisher
Institute of Economic Research, Seoul National University
Citation
Seoul Journal of Economics, Vol.32 No.3, pp. 323-336
Keywords
Group contestLinear externality in prizeIntra-group sharing rulePrivate information on sharing rulesPublic information on sharing rules
Abstract
This study examines contests in which prizes are affected linearly by aggregate effort. In particular, this research analyzes a contest among individuals as a benchmark to scrutinize the effects of prize externality and sharing-rule information on rent-dissipation rate and social welfare. Thereafter, the current study investigates two types of group contest with linear prize externality: one with private information on intra-group sharing rules and the other with public information on intra-group sharing rules. Results indicate as follows. (1) An increase in prize externality increases rent-dissipation rate but has no effect on social welfare. (2) The group contest with private information on sharing rules yields higher social welfare and lower rent-dissipation rate than the one with public information on sharing rules.
ISSN
1225-0279
Language
English
URI
http://hdl.handle.net/10371/160857
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College of Social Sciences (사회과학대학)Institute of Economics Research (경제연구소)Seoul Journal of EconomicsSeoul Journal of Economics vol.32 no.1/4 (2019)
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