Contests to Incentivize a Target Group

TL;DR

This paper analyzes how to design rank-order contests with different prize structures to incentivize a specific target group to increase output, providing equilibrium characterizations and optimal contest properties.

Contribution

It introduces a symmetric Bayes--Nash equilibrium framework for contests with mixed prize accessibility and characterizes optimal contest designs for the target group.

Findings

Equilibrium characterized for contests with group-specific and universal prizes.

Optimal contest structures identified for maximizing target group output.

Analysis of prize discrimination and quota effects on incentives.

Abstract

We study how to incentivize agents in a target group to produce a higher output in the context of incomplete information, by means of rank-order allocation contests. We describe a symmetric Bayes--Nash equilibrium for contests that have two types of rank-based prizes: prizes that are accessible only to the agents in the target group; prizes that are accessible to everyone. We also specialize this equilibrium characterization to two important sub-cases: (i) contests that do not discriminate while awarding the prizes, i.e., only have prizes that are accessible to everyone; (ii) contests that have prize quotas for the groups, and each group can compete only for prizes in their share. For these models, we also study the properties of the contest that maximizes the expected total output by the agents in the target group.