The optimal prize structure of symmetric Tullock contests

*Paul Schweinzer
Economics, University of York

Ella Segev
Ben Gurion Department of Industrial Engineering and Management, University of the Negev

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     Last modified: March 9, 2011
     Presentation date: 03/12/2011 9:00 AM in NH 1120, Session A
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Abstract
We show that the optimal prize structure of symmetric $n$-player Tullock tournaments assigns the entire prize pool to the winner, provided that a symmetric pure strategy equilibrium exists. If such an equilibrium fails to exist under the winner-take-all structure, we construct the optimal prize structure which improves existence conditions by dampening efforts. If no such optimal equilibrium exists, no symmetric pure strategy equilibrium induces positive efforts.