S-Space College of Social Sciences (사회과학대학) Institute of Economics Research (경제연구소) Seoul Journal of Economics Seoul Journal of Economics vol.32 no.1/4 (2019)
Contests with Linear Externality in Prizes
- Park, Sung-Hoon; Lee, Sanghack
- Issue Date
- Seoul Journal of Economics, Vol.32 No.3, pp. 323-336
- Group contest; Linear externality in prize; Intra-group sharing rule; Private information on sharing rules; Public information on sharing rules
- 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.