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weaker contestants. The impact on revenue is more intricate. In contrast to theory, a strict bid-cap does not increase … revenue, but a mild bid-cap can increase revenue even when not predicted by theory. Our data also show that tie-breaking rules …
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A well-known theoretical result in the contest literature is that greater heterogeneity decreases performance of contestants because of the “discouragement effect.” Leveling the playing field by favoring weaker contestants through bid-caps and favorable tie-breaking rules can reduce the...
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team tournaments. Theory predicts that free-riding is likely to occur when there are only between-team incentives, and …
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