M.Sc Student | Shiran Shvarzbard Omer |
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Subject | Competition Among Contests: a Safety Level Analysis |

Department | Department of Industrial Engineering and Management |

Supervisor | ASSOCIATE PROF. Aharon Ron Lavi |

We study a competition among two contests, where each contest designer aims to attract as much effort as possible. Such a competition exists in reality, e.g., in crowd-sourcing websites. Our results are phrased in terms of the "relative prize power " of a contest, which is the ratio of the total prize offered by this contest designer relative to the sum of total prizes of the two contests. When there is a large number of contestants that have a quasi-linear utility function that captures both a risk-aversion effect and a cost of effort, we show that a simple contest attracts a total effort which approaches the relative prize power of the contest designer assuming a large number of contestants. This holds regardless of the contest policy of the opponent, hence providing a "safety level'' which is a robust notion similar in spirit to the max-min solution concept. We then analyze equilibrium total prizes determined by the two contest designers, giving a full characterization for the case where the contest designers are risk-neutral, and showing more generally that the contest designer with the smaller budget allocates a larger fraction of her budget as her total prize.