Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/202623 
Year of Publication: 
2018
Series/Report no.: 
Memorandum No. 02/2018
Publisher: 
University of Oslo, Department of Economics, Oslo
Abstract: 
We consider an effort-maximizing principal distributing a prize fund over two consecutive all-pay auctions. The two contestants are doubly heterogeneous: one of them has a head start in the first contest; and winning contest one gives an advantage in contest two that varies between players. We show that, with a large head start, the principal chooses a zero prize in contest two, i.e., runs a single contest. Otherwise, the laggard winning contest one may overturn the leader 's head start, possibly inciting expected efforts equal to the prize value, avoiding the laggard giving up, and this way mitigating the Matthew effect.
Subjects: 
contest
all-pay auction
head start
catching up
Matthew effect
JEL: 
D74
D72
Document Type: 
Working Paper

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