Fair and consistent prize allocation in competitions

Abstract: Given the final ranking of a competition, how should the total prize endowment be allocated among the competitors? We study consistent prize allocation rules satisfying elementary solidarity and fairness principles. In particular, we axiomatically characterize several families of rules satisfying anonymity, order preservation, and endowment monotonicity, which all fall between the Equal Division rule and the Winner-Takes-All rule. Specific characterizations of rules and subfamilies are directly obtained. To our knowledge, this paper is the first that develops and motivates prize allocation rules for rank-order competitions directly from axioms.