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Contest Functions: Theoretical Foundations and Issues in Estimation

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  • 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.

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Bibliographic Info

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

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Length: 25 pages
Date of creation: Feb 2012
Date of revision:
Handle: RePEc:irv:wpaper:111214

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

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Cited by:
  1. J. Atsu Amegashie, 2013. "Sabotage in Contests: An Overview," CESifo Working Paper Series 4422, CESifo Group Munich.
  2. J. Atsu Amegashie, 2012. "A Nested Contest: Tullock Meets the All-pay Auction," CESifo Working Paper Series 3976, CESifo Group Munich.
  3. 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.
  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).

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