Abstract:
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Some affirmative action policies establish that a set of disadvantaged competitors has
access to an extra prize. Examples are gender quotas or a prize for national competitors
in an international competition. We analyse the effects of creating an extra prize by
reducing the prize in the main competition. Contestants differ in ability and agents
with relatively low ability belong to a disadvantaged minority. All contestants compete
for the main prize, but only disadvantaged agents can win the extra prize. We show
that an extra prize is a powerful tool to ensure participation of disadvantaged agents.
Moreover, for intermediate levels of the disadvantage of the minority, introducing an
extra prize increases total equilibrium effort compared to a standard contest. Thus,
even a contest designer not interested in affirmative action might establish an extra
prize in order to enhance competition.
Keywords: Asymmetric contest, equality of opportunity, affirmative action, discrimination,
prize structure, exclusion principle.
JEL: C72, D72, I38, J78 |