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In this paper, we analyze the role of negative prizes in contest design with a fixed budget, risk-neutral contestants, and independent private abilities.
We provide conditions under which the set of equilibria can be restricted and discuss contest design implications.
The latter result is applied to questions of contest design and more general forms of relative performance payment.
I show that the effect of heterogeneity on contest investments depends on the structure of the competition, which implies that heterogeneity matters for optimal contest design.
Topics include auction and contest design, equilibrium analysis, cryptocurrencies, design of networks and network protocols, reputation systems, social choice, and social network analysis.
Some important modifications of the basic model are reviewed: hierarchical rent-seeking, rent-seeking under risk aversion, insecure rents, sabotage in rent-seeking contests, contest design, commitment and endogenous order of moves, and dynamic rent-seeking.
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