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Title: "Reverse" nested lottery contests
Authors: Fu, Q. 
Lu, J.
Wang, Z.
Keywords: Contest elimination function
Imperfectly discriminatory contests
Least-favorable performance ranking
Multi-prize contest
Issue Date: Jan-2014
Source: Fu, Q., Lu, J., Wang, Z. (2014-01). "Reverse" nested lottery contests. Journal of Mathematical Economics 50 (1) : 128-140. ScholarBank@NUS Repository.
Abstract: This paper proposes a multi-prize "reverse" nested lottery contest model, which can be viewed as the "mirror image" of the conventional nested lottery contest of Clark and Riis (1996a). The reverse-lottery contest model determines winners by selecting losers based on contestants' one-shot effort through a hypothetical sequence of lotteries. We provide a microfoundation for the reverse-lottery contest from a perspective of (simultaneous) noisy performance ranking and establish that the model is underpinned by a unique performance evaluation rule. We further demonstrate that the noisy-ranking model can be interpreted intuitively as a "worst-shot" contest, in which contestants' performances are evaluated based on their most severe mistakes. The reverse-lottery contest model thus depicts a great variety of widely observed competitive activities of this nature. A handy closed-form solution for a symmetric equilibrium of the reverse-lottery contest is obtained. We show that the winner-take-all principle continues to hold in reverse-lottery contests. Moreover, we find that a reverse-lottery contest elicits more effort than a conventional lottery contest whenever the prizes available to contestants are relatively scarce. © 2013 Elsevier B.V.
Source Title: Journal of Mathematical Economics
ISSN: 03044068
DOI: 10.1016/j.jmateco.2013.08.007
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