Contest partitioning in binary contests

In this work we explore the opportunities presented by partitioning contestants in contest into disjoint groups, each competing in an independent contest, with its own prize. This, as opposed to most literature on contest design, which focuses on the setting of a single “grand” (possibly multi-stage) contest, wherein all potential contestants ultimately compete for the same prize(s), with few exceptions that do consider contest partitioning, yet with conflicting preference results concerning the optimal structure to be used. Focusing on binary contests, wherein the quality of contestants’ submissions are endogenously determined, we show that contest partitioning is indeed beneficial under some condition, e.g., whenever the number of contestants, or the prize amount, are “sufficiently large”, where the exact size requirements are a function of the partitioning cost. When partitioning does not entail any cost, we show that it is either a dominating or weakly dominating strategy, depending on the way the organizer’s expected benefit is determined. The analysis is further extended to consider partitioning where some of the sub-contests used contain a single contestant (a singleton). We conclude that contest partitioning is an avenue that contest designers can and should consider, when aiming to maximize their profit.