Contests with Ex-Ante Target Setting

Discussion paper


Robertson, M. (2018). Contests with Ex-Ante Target Setting. Centre for Research in Economic Theory and its Applications, Discussion Paper Series, University of Warwick University of Warwick.
AuthorsRobertson, M.
TypeDiscussion paper
Abstract

I study contests in which each player is ranked by a scoring rule based on both her performance and how close this performance is to a private target, set before the contest.
Each player’s decision problem is to choose her target when performance is subject to a random component. I analyse the incentive properties of target setting, derive conditions on the primitives such that equilibria exist and characterise the players’ behaviour. I show that target setting generates outcome uncertainty under a large class of conditions. In
particular, neither private abilities nor perfectly correlated states are necessary. Target setting, therefore, has important implications in contest design as outcome uncertainty is a salient determinant of consumers’ demand for contests.

Keywordscontests; target setting; competitive balance; incentives; incomplete information.
Year2018
PublisherUniversity of Warwick
Place of publicationCentre for Research in Economic Theory and its Applications, Discussion Paper Series, University of Warwick
Web address (URL)https://warwick.ac.uk/fac/soc/economics/research/centres/creta/papers/manage/creta47_-_matthew_robertson.pdf
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Publication dates
PrintNov 2018
Publication process dates
Deposited26 Feb 2024
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