Submission Fees in Risk-Taking Contests

TL;DR

This paper examines how submission fees influence participant behavior and outcomes in stochastic continuous time contests, revealing optimal fee strategies for different designer objectives.

Contribution

It introduces the analysis of submission fees in stochastic contests and characterizes optimal fee structures for maximizing top or total performance.

Findings

Positive submission fees maximize top performer performance.

Either high or low submission fees optimize total performance.

Submission fees significantly impact contest outcomes and designer strategies.

Abstract

This paper investigates stochastic continuous time contests with a twist: the designer requires that contest participants incur some cost to submit their entries. When the designer wishes to maximize the (expected) performance of the top performer, a strictly positive submission fee is optimal. When the designer wishes to maximize total (expected) performance, either the highest submission fee or the lowest submission fee is optimal.