Competitive Problem Solving and the Optimal Prize
Schemes
Volume 4
Jena Economic Research Papers
2010-12-02
2010
2007
2010-083
Optimal prize scheme
Risk taking
Problem solving
Agents compete to solve a problem. Each agent knows own computational capacity as private information and simultaneously chooses either a risky or a safe problem solving method. This paper analyzes the optimal prize schemes from the perspective of the prize designer who wishes to …nd a solution as quick as possible. It is shown that (i) the winner-take-all scheme can induce excessive risk taking and make problem solving slower (ii) prize schemes with milder competitive pressure induce the optimal risk taking and quicker problem solving.
jportal_jpjournal_00000016
2010-12-02T07:49:35.366Z
2010-12-17T11:54:30.354Z