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The Equivalence of Contests

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  • Subhasish M. Chowdhury

    ()
    (School of Economics, University of East Anglia)

  • Roman M. Sheremeta

    ()
    (Argyros School of Business and Economics, Chapman University)

Abstract

We use a Tullock-type contest model to show that intuitively and structurally different contests can be strategically and revenue equivalent to each other. We consider a two-player contest, where outcome-contingent payoffs are linear functions of prizes, own effort, and the effort of the rival. We identify strategically equivalent contests that generate the same family of best response functions and, as a result, the same revenue. However, two strategically equivalent contests may yield different equilibrium payoffs. Finally, we discuss possible contest design applications and avenues for future theoretical and empirical research.

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Bibliographic Info

Paper provided by Chapman University, Economic Science Institute in its series Working Papers with number 10-07.

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Length: 18 pages
Date of creation: Feb 2010
Date of revision:
Handle: RePEc:chu:wpaper:10-07

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Keywords: rent-seeking; contest; spillover; equivalence; revenue equivalence; contest design;

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  10. Sheremeta, Roman, 2009. "Contest Design: An Experimental Investigation," MPRA Paper 52101, University Library of Munich, Germany.
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  17. Amegashie, J Atsu, 1999. " The Number of Rent-Seekers and Aggregate Rent-Seeking Expenditures: An Unpleasant Result," Public Choice, Springer, vol. 99(1-2), pages 57-62, April.
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Cited by:
  1. Charness, Gary & Masclet, David & Villeval, Marie Claire, 2012. "The Dark Side of Competition for Status," University of California at Santa Barbara, Economics Working Paper Series qt1vr4g446, Department of Economics, UC Santa Barbara.

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