Seminar by Andrea Mattozzi, European University Institute

SALA SEMINARI – 1° PIANO, PALAZZO LEVI CASES, VIA DEL SANTO 33 - ORE 12.30

07.05.2019

Seminar by Andrea Mattozzi, European University Institute

Title: 'How to Pick a Winner', joint with Fabio Michelucci (CERGE-EI)

Abstract:  We study a two-period model in which two agents of dierent and privately-known abilities compete for a single prize by exerting costly eort. A risk- neutral principal can aect the outcome of the contest by allocating resources to agents in each period, and her net payo depends on the relative share allocated to the winner. We analyze how the principal optimal strategy depends on the severity of moral hazard. The results we derive are consistent with stylized facts regarding the dynamics of political campaign contributions and of third-party intervention in military conflicts.