39. Re-thinking exponential reward structures for esports tournaments – A game-theoretic approach
Invited abstract in session FA-8: Game Theory and Strategic Behavior in Real-World Systems, stream Game Theory and Behavioral Management Science.
Friday, 8:45-10:15Room: H8
Authors (first author is the speaker)
| 1. | Friederike Paetz
|
| Anhalt University of Applied Sciences | |
| 2. | Mahmood Pedram
|
| Grenoble Ecole de Management |
Abstract
Nowadays, (competitive) video gaming constitutes a US$180 billion industry with esports being the most rapidly growing aspect. Esports tournament organizers compete for audience and the easiest way to attract a large audience is by expanding the prize pool. A higher prize pool attracts top players, which attracts more audience. Beside the absolute prize pool, the reward structure is a key determinant for top players to enter the tournament. Hence, tournament organizers must assess the best split of the prize pool to the best players in the tournament. So far, exponential reward structures are commonly used, but there is no evidence of its optimality under varying experimental factors, e.g., heterogeneous skills of players, switching opportunities of players between tournaments.
We tackle this issue by analyzing the optimality of varying reward structures of two competing tournaments by considering heterogeneous skills of players and, therefore, different preferences of players towards varying reward structures, e.g., winner-takes-it-all, exponential design, linear design and logarithmic design. Using a game-theoretic model, "we show that in a tournament of approximately equally skilled players a linear reward structure is best, while the existence of a clear best player leads to an exponential design. Furthermore, we conduct a simulation-based framework, that relies on random utility theory and considers players’ opportunity to switch between tournaments. We found that smaller tournaments should favor exponential reward structures while larger tournaments should favor more linear designs.
We conclude that the common practice of exponential reward structures should be rethought by tournament organizers.
Keywords
- Marketing
- Game Theory
- Economic Modeling
Status: accepted
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