TY - JOUR

T1 - Sequential choice of sharing rules in collective contests

AU - Balart, Pau

AU - Flamand, Sabine

AU - Gürtler, Oliver

AU - Troumpounis, Orestis

N1 - This is the peer reviewed version of the following article: Balart P, Flamand S, Gürtler O, Troumpounis O. Sequential choice of sharing rules in collective contests. Journal of Public Economic Theory. 2018;20:703–724. https://doi.org/10.1111/jpet.12303 which has been published in final form at http://onlinelibrary.wiley.com/doi/10.1111/jpet.12303/abstract This article may be used for non-commercial purposes in accordance With Wiley Terms and Conditions for self-archiving.

PY - 2018/10

Y1 - 2018/10

N2 - Groups competing for a prize need to determine how to distribute it among their members in case of victory. Considering competition between two groups of different size, we show that the small group's sharing rule is a strategic complement to the large group's sharing rule in the sense that if the small group chooses a more meritocratic sharing rule, the large group wishes to choose a more meritocratic rule as well. On the contrary, the large group's sharing rule is a strategic substitute to the small group's sharing rule, hence the timing of choice is crucial. For sufficiently private prizes, a switch from a simultaneous choice to the small group being the leader consists in a Pareto improvement and reduces aggregate effort. On the contrary, when the large group is the leader, aggregate effort increases. As a result, the equilibrium timing is such that the small group chooses its sharing rule first. If the prize is not private enough, the small group retires from the competition and switching from a simultaneous to a sequential timing may reverse the results in terms of aggregate effort. The sequential timing also guarantees that the small group never outperforms the large one.

AB - Groups competing for a prize need to determine how to distribute it among their members in case of victory. Considering competition between two groups of different size, we show that the small group's sharing rule is a strategic complement to the large group's sharing rule in the sense that if the small group chooses a more meritocratic sharing rule, the large group wishes to choose a more meritocratic rule as well. On the contrary, the large group's sharing rule is a strategic substitute to the small group's sharing rule, hence the timing of choice is crucial. For sufficiently private prizes, a switch from a simultaneous choice to the small group being the leader consists in a Pareto improvement and reduces aggregate effort. On the contrary, when the large group is the leader, aggregate effort increases. As a result, the equilibrium timing is such that the small group chooses its sharing rule first. If the prize is not private enough, the small group retires from the competition and switching from a simultaneous to a sequential timing may reverse the results in terms of aggregate effort. The sequential timing also guarantees that the small group never outperforms the large one.

U2 - 10.1111/jpet.12303

DO - 10.1111/jpet.12303

M3 - Journal article

VL - 20

SP - 703

EP - 724

JO - Journal of Public Economic Theory

JF - Journal of Public Economic Theory

SN - 1097-3923

IS - 5

ER -