Winner’s Optimal Reimbursement in Contest
This paper explores a designer-optimal reimbursement scheme in all-pay auctions with winner’s reimbursement. Assuming the reimbursement is a linear function of the cost of effort, we obtain analytical solutions for the contestants’ symmetrical equilibrium effort and the contest organizer’s expected...
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| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Wiley
2019-01-01
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| Series: | Discrete Dynamics in Nature and Society |
| Online Access: | http://dx.doi.org/10.1155/2019/9083023 |
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| _version_ | 1832550195538165760 |
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| author | Yong Liu Shaozeng Dong |
| author_facet | Yong Liu Shaozeng Dong |
| author_sort | Yong Liu |
| collection | DOAJ |
| description | This paper explores a designer-optimal reimbursement scheme in all-pay auctions with winner’s reimbursement. Assuming the reimbursement is a linear function of the cost of effort, we obtain analytical solutions for the contestants’ symmetrical equilibrium effort and the contest organizer’s expected revenue. We show that if the effort cost function is concave, the optimal reimbursement scheme is to return the full cost to the winner. On the contrary, if the effort cost function is convex, the optimal reimbursement scheme is not to compensate the winner. Moreover, we find that the organizer’s expected revenue may increase or decrease as the number of contestants increases when the winner is fully reimbursed. |
| format | Article |
| id | doaj-art-1e3a6f70339b46d99516a0179e443a8d |
| institution | Kabale University |
| issn | 1026-0226 1607-887X |
| language | English |
| publishDate | 2019-01-01 |
| publisher | Wiley |
| record_format | Article |
| series | Discrete Dynamics in Nature and Society |
| spelling | doaj-art-1e3a6f70339b46d99516a0179e443a8d2025-02-03T06:07:23ZengWileyDiscrete Dynamics in Nature and Society1026-02261607-887X2019-01-01201910.1155/2019/90830239083023Winner’s Optimal Reimbursement in ContestYong Liu0Shaozeng Dong1School of International Trade and Economics, University of International Business and Economics, Beijing 100029, ChinaSchool of Business, Jiangsu Ocean University, Lianyungang 222000, ChinaThis paper explores a designer-optimal reimbursement scheme in all-pay auctions with winner’s reimbursement. Assuming the reimbursement is a linear function of the cost of effort, we obtain analytical solutions for the contestants’ symmetrical equilibrium effort and the contest organizer’s expected revenue. We show that if the effort cost function is concave, the optimal reimbursement scheme is to return the full cost to the winner. On the contrary, if the effort cost function is convex, the optimal reimbursement scheme is not to compensate the winner. Moreover, we find that the organizer’s expected revenue may increase or decrease as the number of contestants increases when the winner is fully reimbursed.http://dx.doi.org/10.1155/2019/9083023 |
| spellingShingle | Yong Liu Shaozeng Dong Winner’s Optimal Reimbursement in Contest Discrete Dynamics in Nature and Society |
| title | Winner’s Optimal Reimbursement in Contest |
| title_full | Winner’s Optimal Reimbursement in Contest |
| title_fullStr | Winner’s Optimal Reimbursement in Contest |
| title_full_unstemmed | Winner’s Optimal Reimbursement in Contest |
| title_short | Winner’s Optimal Reimbursement in Contest |
| title_sort | winner s optimal reimbursement in contest |
| url | http://dx.doi.org/10.1155/2019/9083023 |
| work_keys_str_mv | AT yongliu winnersoptimalreimbursementincontest AT shaozengdong winnersoptimalreimbursementincontest |