Competitive Problem Solving and the Optimal Prize
Schemes
 Published
 Thu Dec 2 2010
 Number of discussion paper

2010083
 keyword(s)

Optimal prize scheme
Problem solving
Risk taking
 abstract

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 winnertakeall 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.
 article pub. typess JER
 Research article
 article languages JER
 Englisch
 JELClassification for JER
 D82  Asymmetric and Private Information