Abstract
In this article, contestants play with a certain probability in Contest A and with the complementary probability in Contest B. This situation is called contest uncertainty. In both contests, effort is additively distorted by a contest noise parameter which affects the sensitivity of the contest success function (CSF). In Contest A (B), this parameter is linearly added to (subtracted from) effort. We analyze the interaction of contest uncertainty and contest noise on contestant behavior and profit. For symmetric contestants, contest noise has an ambiguous effect on effort and profit. We show that more contest uncertainty can imply greater effort. Furthermore, an introduction of an infinitesimal degree of contest uncertainty can have a large impact on effort and profit. Based on the analysis, this article presents the contest organizer's incentive to manipulate the degree of uncertainty in the contest. For profit or effort maximization, the contest organizer should always eliminate any uncertainty. If contestants are asymmetric, more contest noise increases effort as well as competitive balance if both Contests A and B have the same probability of occurrence.
Grossmann, Martin