Advanced Search
MyIDEAS: Login to save this paper or follow this series

Contest Functions: Theoretical Foundations and Issues in Estimation

Contents:

Author Info

  • Hao Jia

    ()
    (School of Accounting, Economics and Finance, Deakin University)

  • Stergios Skaperdas

    ()
    (Department of Economics, University of California-Irvine)

  • Samarth Vaidya

    ()
    (School of Accounting, Economics and Finance, Deakin University University)

Abstract

Contest functions (alternatively, contest success functions) determine probabilities of winning and losing as a function of contestants’ e ort. They are used widely in many areas of economics that employ contest games, from tournaments and rent-seeking to conflict and sports. We first examine the theoretical foundations of contest functions and classify them into four types of derivation: stochastic, axiomatic, optimally-derived, and microfounded. The additive form (which includes the ratio or “Tullock†functional form) can be derived in all four di erent ways. We also explore issues in the econometric estimation of contest functions, including concerns with data, endogeneity, and model comparison.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.economics.uci.edu/files/economics/docs/workingpapers/2011-2012/skaperdas-14.pdf
Download Restriction: no

Bibliographic Info

Paper provided by University of California-Irvine, Department of Economics in its series Working Papers with number 111214.

as in new window
Length: 25 pages
Date of creation: Feb 2012
Date of revision:
Handle: RePEc:irv:wpaper:111214

Contact details of provider:
Postal: Irvine, CA 92697-3125
Phone: (949) 824-5788
Web page: http://www.economics.uci.edu/
More information through EDIRC

Related research

Keywords: Rent-seeking; Conflict; Tournaments; Litigation; Advertising;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Jack Hirshleifer, 1989. "Conflict and rent-seeking success functions: Ratio vs. difference models of relative success," Public Choice, Springer, Springer, vol. 63(2), pages 101-112, November.
  2. Stergios Skaperdas, 1996. "Contest success functions (*)," Economic Theory, Springer, Springer, vol. 7(2), pages 283-290.
  3. Konrad, Kai A., 2006. "Silent interests and all-pay auctions," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 24(4), pages 701-713, July.
  4. Stergios Skaperdas & Samarth Vaidya, 2012. "Persuasion as a contest," Economic Theory, Springer, Springer, vol. 51(2), pages 465-486, October.
  5. Stefan Szymanski, 2003. "The Economic Design of Sporting Contests," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 41(4), pages 1137-1187, December.
  6. Hao Jia & Stergios Skaperdas, 2011. "Technologies of Conflict," Working Papers, University of California-Irvine, Department of Economics 101111, University of California-Irvine, Department of Economics.
  7. Flavio Menezes & John Quiggin, 2009. "Markets for Influence," Risk & Uncertainty Working Papers, Risk and Sustainable Management Group, University of Queensland WPR09_2, Risk and Sustainable Management Group, University of Queensland.
  8. Gil Epstein & Shmuel Nitzan, 2006. "The Politics of Randomness," Social Choice and Welfare, Springer, Springer, vol. 27(2), pages 423-433, October.
  9. Ralph Rotte & Christoph Schmidt, 2003. "On the production of victory: Empirical determinants of battlefield success in modern war," Defence and Peace Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 14(3), pages 175-192.
  10. Kovenock, D. & de Vries, C.G., 1995. "The All-Pay Auction with Complete Information," UFAE and IAE Working Papers, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC) 311.95, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  11. Fang, Hanming, 2002. " Lottery versus All-Pay Auction Models of Lobbying," Public Choice, Springer, Springer, vol. 112(3-4), pages 351-71, September.
  12. Birendra Rai & Rajiv Sarin, 2009. "Generalized contest success functions," Economic Theory, Springer, Springer, vol. 40(1), pages 139-149, July.
  13. Michelle R. Garfinkel & Stergios Skaperdas, 2006. "Economics of Conflict: An Overview," Working Papers, University of California-Irvine, Department of Economics 050623, University of California-Irvine, Department of Economics, revised Sep 2006.
  14. Corchón, Luis C. & Dahm, Matthias, 2008. "Foundations for contest success functions," Working Papers, Universitat Rovira i Virgili, Department of Economics 2072/9493, Universitat Rovira i Virgili, Department of Economics.
  15. Nti, Kofi O., 2004. "Maximum efforts in contests with asymmetric valuations," European Journal of Political Economy, Elsevier, Elsevier, vol. 20(4), pages 1059-1066, November.
  16. Theofanis Tsoulouhas & Charles R. Knoeber & Anup Agrawal, . "Contests to Become CEO: Incentives, Selection and Handicaps," Working Paper Series, North Carolina State University, Department of Economics 002, North Carolina State University, Department of Economics, revised Jul 2004.
  17. Hao Jia, 2008. "A stochastic derivation of the ratio form of contest success functions," Public Choice, Springer, Springer, vol. 135(3), pages 125-130, June.
  18. Froeb, Luke M & Kobayashi, Bruce H, 1996. "Naive, Biased, Yet Bayesian: Can Juries Interpret Selectively Produced Evidence?," Journal of Law, Economics and Organization, Oxford University Press, Oxford University Press, vol. 12(1), pages 257-76, April.
  19. Ahn, T.K. & Isaac, R. Mark & Salmon, Timothy C., 2011. "Rent seeking in groups," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 29(1), pages 116-125, January.
  20. James J. Heckman, 2008. "Econometric Causality," NBER Working Papers 13934, National Bureau of Economic Research, Inc.
  21. Che, Yeon-Koo & Gale, Ian, 2000. "Difference-Form Contests and the Robustness of All-Pay Auctions," Games and Economic Behavior, Elsevier, Elsevier, vol. 30(1), pages 22-43, January.
  22. Che, Yeon-Koo & Gale, Ian, 1997. " Rent Dissipation When Rent Seekers Are Budget Constrained," Public Choice, Springer, Springer, vol. 92(1-2), pages 109-26, July.
  23. Sung Ha Hwang, 2009. "Contest Success Functions: Theory and Evidence," UMASS Amherst Economics Working Papers, University of Massachusetts Amherst, Department of Economics 2009-04, University of Massachusetts Amherst, Department of Economics.
  24. Konrad, Kai A., 2000. "Spatial contests," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 18(6), pages 965-974, August.
  25. Luis Corchón, 2007. "The theory of contests: a survey," Review of Economic Design, Springer, Springer, vol. 11(2), pages 69-100, September.
  26. Alexander R. W. Robson & Stergios Skaperdas, 2002. "Costly Enforcement of Property Rights and the Coase Theorem," CESifo Working Paper Series 762, CESifo Group Munich.
  27. Bull, Clive & Schotter, Andrew & Weigelt, Keith, 1985. "Tournaments and Piece Rates: An Experimental Study," Working Papers, C.V. Starr Center for Applied Economics, New York University 85-21, C.V. Starr Center for Applied Economics, New York University.
  28. Johannes Münster, 2009. "Group contest success functions," Economic Theory, Springer, Springer, vol. 41(2), pages 345-357, November.
  29. J. Amegashie, 2006. "A contest success function with a tractable noise parameter," Public Choice, Springer, Springer, vol. 126(1), pages 135-144, January.
  30. Sherwin Rosen, 1985. "Prizes and Incentives in Elimination Tournaments," NBER Working Papers 1668, National Bureau of Economic Research, Inc.
  31. Edward Miguel & Shanker Satyanath & Ernest Sergenti, 2004. "Economic Shocks and Civil Conflict: An Instrumental Variables Approach," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 112(4), pages 725-753, August.
  32. Harold Gulliksen & John Tukey, 1958. "Reliability for the law of comparative judgment," Psychometrika, Springer, Springer, vol. 23(2), pages 95-110, June.
  33. Baye, M.R. & Kovenock, D. & De Vries, C.G., 1992. "Rigging the Lobbying Process: An Application of the All- Pay Auction," Papers, Pennsylvania State - Department of Economics 9-92-2, Pennsylvania State - Department of Economics.
  34. Daughety, Andrew F & Reinganum, Jennifer F, 2000. "On the Economics of Trials: Adversarial Process, Evidence, and Equilibrium Bias," Journal of Law, Economics and Organization, Oxford University Press, Oxford University Press, vol. 16(2), pages 365-94, October.
  35. Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
  36. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521766555.
  37. Johannes Münster, 2006. "Lobbying Contests With Endogenous Policy Proposals," Economics and Politics, Wiley Blackwell, Wiley Blackwell, vol. 18(3), pages 389-397, November.
  38. Fonseca, Miguel A., 2009. "An experimental investigation of asymmetric contests," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 27(5), pages 582-591, September.
  39. Knoeber, Charles R & Thurman, Walter N, 1994. "Testing the Theory of Tournaments: An Empirical Analysis of Broiler Production," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 12(2), pages 155-79, April.
  40. Hirshleifer, Jack, 1995. "Theorizing about conflict," Handbook of Defense Economics, Elsevier, in: Keith Hartley & Todd Sandler (ed.), Handbook of Defense Economics, edition 1, volume 1, chapter 7, pages 165-189 Elsevier.
  41. Arye L. Hillman & John G. Riley, 1987. "Politically Contestable Rents and Transfers," UCLA Economics Working Papers, UCLA Department of Economics 452, UCLA Department of Economics.
  42. Szidarovszky, Ferenc & Okuguchi, Koji, 1997. "On the Existence and Uniqueness of Pure Nash Equilibrium in Rent-Seeking Games," Games and Economic Behavior, Elsevier, Elsevier, vol. 18(1), pages 135-140, January.
  43. Reinganum, Jennifer F., 1989. "The timing of innovation: Research, development, and diffusion," Handbook of Industrial Organization, Elsevier, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 14, pages 849-908 Elsevier.
  44. Main, Brian G M & O'Reilly, Charles A, III & Wade, James, 1993. "Top Executive Pay: Tournament or Teamwork?," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 11(4), pages 606-28, October.
  45. Andrew F. Daughety & Jennifer F. Reinganum, 2000. "Appealing Judgments," RAND Journal of Economics, The RAND Corporation, vol. 31(3), pages 502-526, Autumn.
  46. Birendra K. Rai & Rajiv Sarin, 2007. "Generalized Contest Success Functions," Jena Economic Research Papers, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics 2007-082, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  47. Blavatskyy, Pavlo R., 2010. "Contest success function with the possibility of a draw: Axiomatization," Journal of Mathematical Economics, Elsevier, vol. 46(2), pages 267-276, March.
  48. Dasgupta, Ani & Nti, Kofi O., 1998. "Designing an optimal contest," European Journal of Political Economy, Elsevier, Elsevier, vol. 14(4), pages 587-603, November.
  49. Small, Kenneth A & Hsiao, Cheng, 1985. "Multinomial Logit Specification Tests," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 26(3), pages 619-27, October.
  50. Baik, Kyung Hwan, 1998. "Difference-form contest success functions and effort levels in contests," European Journal of Political Economy, Elsevier, Elsevier, vol. 14(4), pages 685-701, November.
  51. Glenn C. Loury, 1976. "Market Structure and Innovation," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 256, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  52. Ronald G. Ehrenberg & Michael L. Bognanno, 1988. "Do Tournaments Have Incentive Effects?," NBER Working Papers 2638, National Bureau of Economic Research, Inc.
  53. Nitzan, Shmuel, 1994. "Modelling rent-seeking contests," European Journal of Political Economy, Elsevier, Elsevier, vol. 10(1), pages 41-60, May.
  54. Schmalensee, Richard, 1978. "A Model of Advertising and Product Quality," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 86(3), pages 485-503, June.
  55. Hirshleifer, Jack & Osborne, Evan, 2001. " Truth, Effort, and the Legal Battle," Public Choice, Springer, Springer, vol. 108(1-2), pages 169-95, July.
  56. Barry J. Nalebuff & Joseph E. Stiglitz, 1983. "Prices and Incentives: Towards a General Theory of Compensation and Competition," Bell Journal of Economics, The RAND Corporation, The RAND Corporation, vol. 14(1), pages 21-43, Spring.
  57. Richard L. Fullerton & R. Preston McAfee, 1999. "Auctioning Entry into Tournaments," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 107(3), pages 573-605, June.
  58. Jörg Franke & Christian Kanzow & Wolfgang Leininger & Alexandra Väth, 2009. "Effort Maximization in Asymmetric N-Person Contest Games," CESifo Working Paper Series 2744, CESifo Group Munich.
  59. Yeon-Koo Che & Ian Gale, 1998. "Caps on Political Lobbying," Microeconomics, EconWPA 9809003, EconWPA.
  60. Baye, Michael R. & Hoppe, Heidrun C., 2003. "The strategic equivalence of rent-seeking, innovation, and patent-race games," Games and Economic Behavior, Elsevier, Elsevier, vol. 44(2), pages 217-226, August.
  61. Sunde, Uwe, 2003. "Potential, Prizes and Performance: Testing Tournament Theory with Professional Tennis Data," IZA Discussion Papers 947, Institute for the Study of Labor (IZA).
  62. D. McFadden & J. Hausman, 1981. "Specification Tests for the Multinominal Logit Model," Working papers, Massachusetts Institute of Technology (MIT), Department of Economics 292, Massachusetts Institute of Technology (MIT), Department of Economics.
  63. Ronald G. Ehrenberg & Michael L. Bognanno, 1990. "The incentive effects of tournaments revisited: Evidence from the European PGA tour," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 43(3), pages 74-88, February.
  64. Jack Hirshleifer, 1995. "Theorizing About Conflict," UCLA Economics Working Papers, UCLA Department of Economics 727, UCLA Department of Economics.
  65. Muller, Holger M & Warneryd, Karl, 2001. "Inside versus Outside Ownership: A Political Theory of the Firm," RAND Journal of Economics, The RAND Corporation, vol. 32(3), pages 527-41, Autumn.
  66. Dixit, Avinash K, 1987. "Strategic Behavior in Contests," American Economic Review, American Economic Association, American Economic Association, vol. 77(5), pages 891-98, December.
  67. Christian Riis & Derek J. Clark, 1997. "Contest success functions: an extension," Economic Theory, Springer, Springer, vol. 11(1), pages 201-204.
  68. Gil S. Epstein & Shmuel Nitzan, 2002. "Politics of Randomness," CESifo Working Paper Series 803, CESifo Group Munich.
  69. Konrad, Kai A., 2009. "Strategy and Dynamics in Contests," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780199549603, October.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. J. Atsu Amegashie, 2012. "A Nested Contest: Tullock Meets the All-Pay Auction," Working Papers, University of Guelph, Department of Economics and Finance 1211, University of Guelph, Department of Economics and Finance.
  2. PEETERS, Thomas & SZYMANSKI, Stefan, 2012. "Vertical restraints in soccer: Financial fair play and the English Premier League," Working Papers 2012028, University of Antwerp, Faculty of Applied Economics.
  3. J. Atsu Amegashie, 2013. "Sabotage in Contests: An Overview," CESifo Working Paper Series 4422, CESifo Group Munich.
  4. Amegashie, J. Atsu, 2012. "A nested contest: Tullock meets the All-Pay Auction," MPRA Paper 41654, University Library of Munich, Germany, revised 03 Sep 2012.
  5. María Cubel & Santiago Sanchez-Pages, 2014. "Difference-form group contests," Working Papers 2014/6, Institut d'Economia de Barcelona (IEB).

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:irv:wpaper:111214. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jennifer dos Santos).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.