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Welfare Maximizing Contest Success Functions when the Planner Cannot Commit

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  • Corchón, Luis C.
  • Dahm, Matthias

Abstract

We analyze how a contest organizer chooses optimally the winner when the contestants' efforts are already exerted and commitment to the use of a given contest success function is not possible. We de…ne the notion of rationalizability in mixed-strategies to capture such a situation. Our approach allows to derive different contest success functions depending on the aims and attitudes of the decider. We derive contest success functions which are closely related to commonly used functions providing new support for them. By taking into account social welfare considerations our approach bridges the contest literature and the recent literature on political economy. Keywords: Endogenous Contests, Contest Success Function, Mixed-Strategies. JEL Classi…cation: C72 (Noncooperative Games), D72 (Economic Models of Political Processes: Rent-Seeking, Elections), D74 (Conflict; Conflict Resolution; Alliances)

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Paper provided by Universitat Rovira i Virgili, Department of Economics in its series Working Papers with number 2072/148481.

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Date of creation: 2010
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Handle: RePEc:urv:wpaper:2072/148481

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Keywords: Teoria de jocs; Ciències polítiques -- Models matemàtics; Presa de decisions; 338 - Situació econòmica. Política econòmica. Gestió; control i planificació de l'economia. Producció. Serveis. Turisme. Preus;

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  1. Drazen Prelec, 1998. "The Probability Weighting Function," Econometrica, Econometric Society, vol. 66(3), pages 497-528, May.
  2. Luis Corchon & Matthias Dahm, 2007. "Foundations For Contest Success Functions," Economics Working Papers we070401, Universidad Carlos III, Departamento de Economía.
  3. Birendra Rai & Rajiv Sarin, 2009. "Generalized contest success functions," Economic Theory, Springer, vol. 40(1), pages 139-149, July.
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Cited by:
  1. Matthias Dahm & Robert Dur & Amihai Glazer, 2014. "How a firm can induce legislators to adopt a bad policy," Public Choice, Springer, vol. 159(1), pages 63-82, April.
  2. Chowdhury, Subhasish & Sheremeta, Roman, 2014. "Strategically Equivalent Contests," MPRA Paper 55450, University Library of Munich, Germany.
  3. Dahm, Matthias & Glazer, Amihai,, 2013. "A Carrot and Stick Approach to Agenda-Setting," Working Papers 2072/222199, Universitat Rovira i Virgili, Department of Economics.
  4. María Cubel & Santiago Sanchez-Pages, 2014. "Difference-form group contests," Working Papers 2014/6, Institut d'Economia de Barcelona (IEB).
  5. Pelosse, Yohan, 2011. "Equivalence of optimal noisy-ranking contests and Tullock contests," Journal of Mathematical Economics, Elsevier, vol. 47(6), pages 740-748.
  6. Leonid Polishchuk & Alexander Tonis, 2013. "Endogenous contest success functions: a mechanism design approach," Economic Theory, Springer, vol. 52(1), pages 271-297, January.

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