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