A unique characteristic of crowdsourcing contest is the coexistence of multiple contests and each individual contestant strategically chooses the contest that maximizes his/her expected gain. The competition between contests for contestants significantly changes the optimal allocation of prizes for contest organizers. We show that the contestants with higher ability prefer to single-prize contests while those with lower ability prefer to multiple-prize contests, which makes single-prize contest is no longer the optimal choice for organizers as it was in the context of a single contest. We demonstrate that the organizers may allocate multiple prizes whether they intent to maximize total efforts or highest efforts, and presents the condition under which the multiple-prize approach will be optimal.
Ge, Ruyi; Zhang, Pengzhu; and Gu, Bin, "The Allocation of Prizes in Crowdsourcing Contests" (2010). ICEB 2010 Proceedings. 61.