IDEAS home Printed from https://ideas.repec.org/a/eee/mateco/v47y2011i3p309-317.html
   My bibliography  Save this article

Welfare maximizing contest success functions when the planner cannot commit

Author

Listed:
  • Corchón, Luis
  • 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 define 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.

Suggested Citation

  • Corchón, Luis & Dahm, Matthias, 2011. "Welfare maximizing contest success functions when the planner cannot commit," Journal of Mathematical Economics, Elsevier, vol. 47(3), pages 309-317.
    • Handle: RePEc:eee:mateco:v:47:y:2011:i:3:p:309-317
    DOI: 10.1016/j.jmateco.2010.12.018
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S030440681100036X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jmateco.2010.12.018?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Birendra Rai & Rajiv Sarin, 2009. "Generalized contest success functions," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 40(1), pages 139-149, July.
    2. Che, Yeon-Koo & Gale, Ian, 2000. "Difference-Form Contests and the Robustness of All-Pay Auctions," Games and Economic Behavior, Elsevier, vol. 30(1), pages 22-43, January.
    3. Stergios Skaperdas & Samarth Vaidya, 2012. "Persuasion as a contest," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 51(2), pages 465-486, October.
    4. Kolm, Serge-Christophe, 1976. "Unequal inequalities. II," Journal of Economic Theory, Elsevier, vol. 13(1), pages 82-111, August.
    5. Konrad, Kai A., 2002. "Investment in the absence of property rights; the role of incumbency advantages," European Economic Review, Elsevier, vol. 46(8), pages 1521-1537, September.
    6. Dasgupta, Ani & Nti, Kofi O., 1998. "Designing an optimal contest," European Journal of Political Economy, Elsevier, vol. 14(4), pages 587-603, November.
    7. Grossman, Gene M & Helpman, Elhanan, 1994. "Protection for Sale," American Economic Review, American Economic Association, vol. 84(4), pages 833-850, September.
    8. Warneryd, Karl, 2000. "In Defense of Lawyers: Moral Hazard as an Aid to Cooperation," Games and Economic Behavior, Elsevier, vol. 33(1), pages 145-158, October.
    9. Kolm, Serge-Christophe, 1976. "Unequal inequalities. I," Journal of Economic Theory, Elsevier, vol. 12(3), pages 416-442, June.
    10. Stergios Skaperdas, 1996. "Contest success functions (*)," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 7(2), pages 283-290.
    11. Gil Epstein & Shmuel Nitzan, 2006. "The Politics of Randomness," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 27(2), pages 423-433, October.
    12. Pavlo Blavatskyy, "undated". "Contest success function with the possibility of a draw: axiomatization," IEW - Working Papers 208, Institute for Empirical Research in Economics - University of Zurich.
    13. 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.
    14. Hao Jia, 2008. "A stochastic derivation of the ratio form of contest success functions," Public Choice, Springer, vol. 135(3), pages 125-130, June.
    15. Andrew Yates, 2011. "Winner-pay contests," Public Choice, Springer, vol. 147(1), pages 93-106, April.
    16. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    17. Konrad, Kai A., 2007. "Strategy in contests: an introduction [Strategie in Turnieren – eine Einführung]," Discussion Papers, Research Unit: Market Processes and Governance SP II 2007-01, WZB Berlin Social Science Center.
    18. Kihlstrom, Richard E & Mas-Colell, Andreu & Sonnenschein, Hugo, 1976. "The Demand Theory of the Weak Axiom of Revealed Preference," Econometrica, Econometric Society, vol. 44(5), pages 971-978, September.
    19. Konrad, Kai A., 2009. "Strategy and Dynamics in Contests," OUP Catalogue, Oxford University Press, number 9780199549603.
    20. Birendra K. Rai & Rajiv Sarin, 2007. "Generalized Contest Success Functions," Jena Economics Research Papers 2007-082, Friedrich-Schiller-University Jena.
    21. Ray, Debraj & Ueda, Kaoru, 1996. "Egalitarianism and Incentives," Journal of Economic Theory, Elsevier, vol. 71(2), pages 324-348, November.
    22. Warneryd, Karl, 1998. "Distributional conflict and jurisdictional organization," Journal of Public Economics, Elsevier, vol. 69(3), pages 435-450, September.
    23. Luis Corchón & Matthias Dahm, 2010. "Foundations for contest success functions," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 43(1), pages 81-98, April.
    24. Skaperdas, Stergios & Gan, Li, 1995. "Risk Aversion in Contests," Economic Journal, Royal Economic Society, vol. 105(431), pages 951-962, July.
    25. Johannes Münster, 2009. "Group contest success functions," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 41(2), pages 345-357, November.
    26. Jack Hirshleifer, 1989. "Conflict and rent-seeking success functions: Ratio vs. difference models of relative success," Springer Books, in: Roger D. Congleton & Arye L. Hillman & Kai A. Konrad (ed.), 40 Years of Research on Rent Seeking 1, pages 251-262, Springer.
    27. Cheng Leonard K. & Zhu Min, 1995. "Mixed-Strategy Nash Equilibrium Based upon Expected Utility and Quadratic Utility," Games and Economic Behavior, Elsevier, vol. 9(2), pages 139-150, May.
    28. Drazen Prelec, 1998. "The Probability Weighting Function," Econometrica, Econometric Society, vol. 66(3), pages 497-528, May.
    29. Robert A. Pollak, 1971. "Additive Utility Functions and Linear Engel Curves," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 38(4), pages 401-414.
    30. Baik, Kyung Hwan, 1998. "Difference-form contest success functions and effort levels in contests," European Journal of Political Economy, Elsevier, vol. 14(4), pages 685-701, November.
    31. Luis Corchón & Matthias Dahm, 2010. "Foundations for contest success functions," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 43(1), pages 81-98, April.
    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


    Cited by:

    1. Luis C. Corchón & Marco Serena, 2016. "Properties of Contests," Working Papers tax-mpg-rps-2018-10, Max Planck Institute for Tax Law and Public Finance.
    2. Sanchez-Pages, Santiago & Cubel, Maria, 2015. "An axiomatization of difference-form contest success functions," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN 2015-49, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Subhasish Chowdhury & Roman Sheremeta, 2015. "Strategically equivalent contests," Theory and Decision, Springer, vol. 78(4), pages 587-601, April.
    4. Yohan Pelosse, 2024. "A Non-Cooperative Shapley Value Representation of Luce Contests Success Functions," Working Papers 2024-01, Swansea University, School of Management.
    5. Esteve-González, Patricia, 2016. "Moral hazard in repeated procurement of services," International Journal of Industrial Organization, Elsevier, vol. 48(C), pages 244-269.
    6. René Kirkegaard, 2020. "Microfounded Contest Design," Working Papers 2003, University of Guelph, Department of Economics and Finance.
    7. Pelosse, Yohan, 2011. "Equivalence of optimal noisy-ranking contests and Tullock contests," Journal of Mathematical Economics, Elsevier, vol. 47(6), pages 740-748.
    8. Cubel, María & Sanchez-Pages, Santiago, 2016. "An axiomatization of difference-form contest success functions," Journal of Economic Behavior & Organization, Elsevier, vol. 131(PA), pages 92-105.
    9. Jose Alcalde & Matthias Dahm, 2016. "Proportional payoffs in legislative bargaining with weighted voting: a characterization," Discussion Papers 2016-03, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    10. María Cubel & Santiago Sanchez-Pages, 2014. "Difference-form group contests," Working Papers 2014/6, Institut d'Economia de Barcelona (IEB).
    11. Dahm, Matthias & Glazer, Amihai, 2015. "A carrot and stick approach to agenda-setting," Journal of Economic Behavior & Organization, Elsevier, vol. 116(C), pages 465-480.
    12. Alcalde, José & Dahm, Matthias, 2019. "Dual sourcing with price discovery," Games and Economic Behavior, Elsevier, vol. 115(C), pages 225-246.
    13. María Cubel & Santiago Sanchez-Pages, 2014. "Difference-form group contests," Working Papers 2014/6, Institut d'Economia de Barcelona (IEB).
    14. 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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Corchón, Luis & Dahm, Matthias, 2011. "Welfare maximizing contest success functions when the planner cannot commit," Journal of Mathematical Economics, Elsevier, vol. 47(3), pages 309-317.
    2. Jia, Hao & Skaperdas, Stergios & Vaidya, Samarth, 2013. "Contest functions: Theoretical foundations and issues in estimation," International Journal of Industrial Organization, Elsevier, vol. 31(3), pages 211-222.
    3. Hao Jia & Stergios Skaperdas, 2011. "Technologies of Conflict," Working Papers 101111, University of California-Irvine, Department of Economics.
    4. Cubel, María & Sanchez-Pages, Santiago, 2016. "An axiomatization of difference-form contest success functions," Journal of Economic Behavior & Organization, Elsevier, vol. 131(PA), pages 92-105.
    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. Sanchez-Pages, Santiago & Cubel, Maria, 2015. "An axiomatization of difference-form contest success functions," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN 2015-49, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    7. Johannes Münster, 2009. "Group contest success functions," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 41(2), pages 345-357, November.
    8. Pelosse, Yohan, 2009. "Mediated Contests and Strategic Foundations for Contest Success Functions," MPRA Paper 18664, University Library of Munich, Germany.
    9. María Cubel & Santiago Sanchez-Pages, 2014. "Difference-form group contests," Working Papers 2014/6, Institut d'Economia de Barcelona (IEB).
    10. María Cubel & Santiago Sanchez-Pages, 2014. "Difference-form group contests," Working Papers 2014/6, Institut d'Economia de Barcelona (IEB).
    11. Stergios Skaperdas & Samarth Vaidya, 2012. "Persuasion as a contest," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 51(2), pages 465-486, October.
    12. Sakshi Gupta & Ram Singh, 2018. "On Existence and Properties of Pure-strategy Equilibria under Contests," Working Papers id:12840, eSocialSciences.
    13. Alberto Vesperoni, 2016. "A contest success function for rankings," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 47(4), pages 905-937, December.
    14. Gil Epstein & Yosef Mealem, 2015. "Politicians, governed versus non-governed interest groups and rent dissipation," Theory and Decision, Springer, vol. 79(1), pages 133-149, July.
    15. Wasser, Cédric, 2013. "A note on Bayesian Nash equilibria in imperfectly discriminating contests," Mathematical Social Sciences, Elsevier, vol. 66(2), pages 180-182.
    16. Luis Corchón & Matthias Dahm, 2010. "Foundations for contest success functions," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 43(1), pages 81-98, April.
    17. James W. Boudreau & Shane Sanders & Nicholas Shunda, 2019. "The role of noise in alliance formation and collusion in conflicts," Public Choice, Springer, vol. 179(3), pages 249-266, June.
    18. Lu, Jingfeng & Wang, Zhewei, 2015. "Axiomatizing multi-prize nested lottery contests: A complete and strict ranking perspective," Journal of Economic Behavior & Organization, Elsevier, vol. 116(C), pages 127-141.
    19. Hwang, Sung-Ha, 2012. "Technology of military conflict, military spending, and war," Journal of Public Economics, Elsevier, vol. 96(1), pages 226-236.
    20. Subhasish Chowdhury & Roman Sheremeta, 2015. "Strategically equivalent contests," Theory and Decision, Springer, vol. 78(4), pages 587-601, April.

    More about this item

    Keywords

    Endogenous contests; Contest success function; Mixed-strategies;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:mateco:v:47:y:2011:i:3:p:309-317. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jmateco .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.