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Contests with Random Noise and a Shared Prize

Sheremeta, Roman and Masters, William and Cason, Timothy (2009): Contests with Random Noise and a Shared Prize.

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This note introduces a model of contests with random noise and a shared prize that combines features of Tullock (1980) and Lazear and Rosen (1981). Similar to results in Lazear and Rosen, as the level of noise decreases the equilibrium effort rises. As the noise variance approaches zero, the equilibrium effort of the shared-prize contest approaches that of a Tullock lottery contest.

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