Favoritism in Contests: Head Starts and Handicaps
René Kirkegaard*
Date: 2009-05-17 10:00 am – 10:30 am
Last modified: 2009-04-17
Abstract
We examine a contest, modelled as an all-pay auction, in which a strong and a weak contestant compete, and where a contestant may suffer from a handicap or benefi
t from a head start. The former reduces the contestant's score by a fi
xed percentage; the latter is an additive bonus. The two instruments affect the contest in signi
cantly different ways. In particular, a handicap does not "cancel out" a head start. The effort maximizing combination of head starts and handicaps is then analyzed. In the benchmark model, it is generally profi
table to give the weak contestant a head start. However, we identify a trade-off which implies that it may or may not be profi
table to handicap the strong contestant. Indeed, the weak contestant may have a head start and a handicap. The trade-off is absent in a perturbed model, but there it is unambiguously the weak contestant who should be handicapped.