Sabotage in Contests: A Survey

A contest is a situation in which individuals expend irretrievable resources to win valuable prize(s). ‘Sabotage’ is a deliberate and costly act of damaging a rival’s' likelihood of winning the contest. Sabotage can be observed in, e.g., sports, war, promotion tournaments, political or marketing campaigns. In this article, we provide a model and various perspectives on such sabotage activities and review the economics literature analyzing the act of sabotage in contests. We discuss the theories and evidence highlighting the means of sabotage, why sabotage occurs, and the effects of sabotage on individual players and on overall welfare, along with possible mechanisms to reduce sabotage. We note that most sabotage activities are aimed at the ablest player, the possibility of sabotage reduces productive effort exerted by the players, and sabotage may lessen the effectiveness of public policies, such as affirmative action, or information revelation in contests. We discuss various policies that a designer may employ to counteract sabotage activities. We conclude by pointing out some areas of future research

Strategically Equivalent Contests

Using a two-player Tullock-type contest, we show that intuitively and structurally different contests can be strategically equivalent. Strategically equivalent contests generate the same best response functions and, as a result, the same equilibrium efforts. However, strategically equivalent contests may yield different equilibrium payoffs. We propose a simple two-step procedure to identify strategically equivalent contests. Using this procedure, we identify contests that are strategically equivalent to the original Tullock contest, and provide new examples of strategically equivalent contests. Finally, we discuss possible contest design applications and avenues for future theoretical and empirical research

Tournaments and piece rates revisited: a theoretical and experimental study of output-dependent prize tournaments

Tournaments represent an increasingly important component of organizational compensation systems. While prior research focused on fixed-prize tournaments where the prize to be awarded is set in advance, we introduce ‘output-dependent prizes’ where the tournament prize is endogenously determined by agents’ output—it is high when the output is high and low when the output is low. We show that tournaments with output-dependent prizes outperform fixed-prize tournaments and piece rates. A multi-agent experiment supports the theoretical result

Preemptive behavior in sequential-move tournaments with heterogeneous agents

Rank-order tournaments are usually modeled simultaneously. However, real tournaments are often sequential. We show that agents' strategic behavior in sequential-move tournaments significantly differ from the one in simultaneous-move tournaments: In a sequential-move tournament with heterogeneous agents, the first acting agent may choose a preemptively high effort so that the following agent gives up. The principal is able to prevent preemptive behavior in equilibrium by choosing a sufficiently small spread between winner and loser prize. Copyright Springer-Verlag Berlin/Heidelberg 2005Preemption, tournaments,