Past exam of the mathematics course of the University of Cambridge 2014 iii Paper 39 2 Solution Created 2026-10-03 Updated 2026-10-06
Let , so a type values a prize at . In a symmetric increasing Bayes-Nash equilibrium of this rank-order contest, a player reporting type wins when at most opponents have larger types. Its winning probability isHere the count of opponents above has a binomial distribution. Differentiation, or the associated order statistic density, givesDefine the effort by the all-pay effort identityThis also verifies equilibrium globally. The derivative of a type 's payoff from reporting is , positive before and negative after . Thus truthful reporting is a best response. Bidding above the maximal equilibrium effort gains no additional winning probability. Type zero chooses zero effort.
By exchanging the two integrations, the expected value of total effort isThe last integral is the moment for a Beta distribution with parameters and , namely . This is the uniform-value multi-prize all-pay effort formula.
Put and . The positive constant multiplying does not affect the maximizing . Sincethe assumed inequality makes nonincreasing on the feasible interval. Hence one prize maximizes expected total effort.
For the power family, the PDF gives . ThenIf , this derivative is strictly negative for : the bracket is affine and its values at the endpoints are and . Thus is optimal.
If , the unique continuous maximizer isThe objective strictly increases before and decreases after it. Therefore its discrete maximizer lies amongCompare the surviving candidates using , since . If is an integer, that integer is the unique maximizer; if its floor is zero, the only feasible candidate is . This proves the discrete prize-count optimization for a power-valued contest including the endpoint cases.
The sufficient condition need only hold on . The power family is undefined at zero, so the printed endpoint cannot apply to it. More generally, a positive finite value would make the displayed inequality fail at zero. The design argument uses only positive feasible prize fractions and needs no value there.
Past exam of the mathematics course of the University of Cambridge 2015 iii Paper 42 2 Solution Created 2026-10-03 Updated 2026-10-06
Assume the usual continuous nonnegative valuation distribution, so ties occur only on zero-probability events. Put . In a monotone symmetric Bayesian Nash equilibrium, a type is first with probability and second with probability . Its rank-order expected prize allocation in is thereforeThe all-pay effort identity gives . It also verifies equilibrium directly: a type imitating type has utility , whose derivative is , so the true type is a best response.
In the first version of , the two contests have expected allocationsThere is no common effort budget, and quasilinear utility makes the two effort choices separable. Since , adding their all-pay effort identities yieldsThe equality holds type by type for aggregate effort, rather than only after taking expectations. The within-player correlation of the two efforts does not enter these additive expected payoffs.
For the second version of , let denote descending order statistics. The expected effort in a rank-order contest with prize vector isEquivalently, decompose the allocation into a unit award to the best player and a unit award to each of the best two players, then use revenue equivalence: the corresponding total auction payments are and . Two separate first-place contests with prize values one and two instead generateConsequentlyFor a nondegenerate continuous distribution, the inequality is strict. No regularity of virtual valuations is needed for this comparison. With a uniform distribution on , the two totals are and , giving a difference of .
With independent uniform types, equal prizes of scale and unit effort costs, a symmetric Bayesian Nash equilibrium has total expected effort . The all-pay effort identity yields . The allocation derivative is a Beta distribution density with parameters , so integration gives the formula.