O'Keeffe, Mary; Viscusi, W. Kip; and Zeckhauser, Richard J. Economic Contests: Comparative Reward Schemes.J. Labor Econ. 2 (January 1984): 27-56. . The above paper models
O'Keeffe, Mary; Viscusi, W. Kip; and Zeckhauser, Richard J. "Economic Contests: Comparative Reward Schemes."J. Labor Econ. 2 (January 1984): 27-56. . The above paper models the even versus uneven tournaments. . Let's assume, in an uneven tournament, to exert the same amount of effort, it costs twice as much for player j than for player i. That is, c(e;) = 2*c(e;) .O'Keeffe et al. (1984) shows that the optimal amount of effort for player i (the advantaged one) is: 4a(M - m)c 16a2 + (M - m)c and the optimal effort for player j (the disadvantaged player) is: 2a(M - m)c 16a2 + (M - m)c . To induce the maximum amount of total effort (ei*tej*), what is the best way to set the two prizes? Please support your answer mathematically. Pick your best weapon to tackle this problem (Hints: calculus? Excel?).: )
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