Inter and intra-group conflicts as a foundation for contest success functions
AbstractThis paper introduces a notion of partitioned correlated equilibrium that extends Aumann's correlated equilibrium concept (1974, 1987). This concept captures the non-cooperative interactions arising simultaneously within and between groups. We build on this notion in order to provide a foundation for contest success functions (CSFs) in a game wherein contests arise endogenously. Our solution concept and analysis are general enough to give a foundation for any model of contest using standard equilibrium concepts like e.g., Nash, Bayesian-Nash or Perfect-Nash equilibria. In our environment, popular CSFs can be interpreted as a list of equilibrium conjectures held by players whenever they contemplate deviating from the ``peaceful outcome'' of the ``group formation game''. Our setup allows to relate the form of prominent CSFs with some textbook examples of quasi-linear utility functions, social utility functions in the spirit of Fehr and Schmidt (1999) and non-expected models of utility a la Quiggin (1981, 1982). We also show that our framework can accommodate situations in which agents cannot correlate their actions.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 31468.
Date of creation: 2011
Date of revision:
Contest success functions; Correlated equilibrium; Inter and intra-group conflicts; Induced contests;
Find related papers by JEL classification:
- D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-06-18 (All new papers)
- NEP-CDM-2011-06-18 (Collective Decision-Making)
- NEP-EVO-2011-06-18 (Evolutionary Economics)
- NEP-GTH-2011-06-18 (Game Theory)
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