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Effort Maximization in Asymmetric N-person Contest Games

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Author Info
Jörg Franke ()
Christian Kanzow
Wolfgang Leininger
Alexandra Väth

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Abstract

This paper provides existence and characterization of the optimal contest success function under the condition that the objective of the contest designer is total effort maximization among n heterogeneous players. Heterogeneity of players makes active participation of a player in equilibrium endogenous with respect to the specific contest success function adopted by the contest designer. Hence, the aim of effort maximization implies the identification of those players who should be excluded from making positive efforts.We give a general proof for the existence of an optimal contest success function and provide an algorithm for the determination of the set of actively participating players.This is turn allows to determine optimal efforts in closed form.An important general feature of the solution is that maximization of total effort requires at least three players to be active.

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Publisher Info
Paper provided by Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen in its series Ruhr Economic Papers with number 0130.

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Length: 30 pages
Date of creation: Jul 2009
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Handle: RePEc:rwi:repape:0130

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Related research
Keywords: Effort maximization; existence of solution; asymmetric contests; participation constraints;

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Find related papers by JEL classification:
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior

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