Hunting for the discouragement effect in contests

The “discouragement effect” (DE) is mentioned routinely as a reason for why heterogeneity detrimental incentives in contests. It serves theoretical argument various policies aimed at homogenizing contestants.We show that static, noisy contests, the DE not generic and robust often implied literature. We divide widely used contest models into two classes. In first class, either decreases or increases aggregate effort. second effect of depends crucially on how it defined. Hence, cannot serve go-to contests undesirable.