Public Choice

, Volume 129, Issue 1–2, pp 217–231 | Cite as

Optimal contest design, closeness and the contest success function

  • Marco Runkel
Original Article


This paper considers the optimal design of an asymmetric two-player contest when the designer’s payoff depends not only on performance of the contestants, but also on the closeness of the contest measured by the difference in winning probabilities. In contrast to previous studies, the impact of closeness on the optimal prize depends on the shape of the contest success function. Furthermore, including closeness in the designer’s objective may induce the designer to uniformly increase the contestants’ effort costs. A similar result is obtained in case the designer may handicap the stronger contestant, but an even contest is never optimal.

Key Words

Closeness Contest design Contest success function 


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Copyright information

© Springer Science+Business Media, B.V. 2006

Authors and Affiliations

  1. 1.Department of EconomicsUniversity of MunichMunichGermany

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