Location of Repository

Carrots and Sticks: Prizes and Punishments in Contests

By Benny Moldovanu, Aner Sela and Xianwen Shi


We study optimal contest design in situations where the designer can reward high performance agents with positive prizes and punish low performance agents with negative prizes. We link the optimal prize structure to the curvature of distribution of abilities in the population. In particular, we identify conditions under which, even if punishment is costly, punishing the bottom is more effective than rewarding the top in eliciting effort input. If punishment is costless, we study the optimal number of punishments in the contest.Contests, All-pay auctions, Punishments, Order Statistics

OAI identifier:

Suggested articles



  1. (1983). A Comparison of Tournaments and Contracts,"
  2. (2007). Adding a Stick to the Carrot? The Interaction of Bonuses and Fines",
  3. (1999). Auctioning Entry into Tournaments,"
  4. (1998). Competition over More than One Prize,"
  5. (2006). Contest Architecture,"
  6. (2007). Contests for Status,"
  7. (1995). Digging for Golden Carrots: An Analysis of Research Tournaments,"
  8. (2009). How to Motivate Innovation: Subsidies and Prizes?" working paper,
  9. (1966). Inequalities for Linear Combinations of Order Statistics from Restricted Families,"
  10. (1980). Ivancevich
  11. (1988). Optimal Contests,"
  12. (1983). Prizes and Incentives: Towards a General Theory of Compensation and Competition,"
  13. (1981). Rank-Order Tournaments as Optimum Labor Contracts,"
  14. (1993). Rigging the Lobbying Process,"
  15. (2003). The Carrot or the Stick: Rewards, Punishments, and Cooperation,"
  16. (2007). The Nature of Tournaments," working paper, Sloan School of Management,
  17. (2001). The Optimal Allocation of Prizes in Contests,"
  18. (1998). The Symmetric Multiple Prize All-Pay Auction with Complete Information,"

To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.