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Welfare maximizing contest success functions when the planner cannot commit

  • Luis Corchon

    ()

  • Matthias Dahm

    ()

We analyze how a contest organizer chooses 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.

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Paper provided by Universidad Carlos III, Departamento de Economía in its series Economics Working Papers with number we097343.

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Date of creation: Nov 2009
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Handle: RePEc:cte:werepe:we097343
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  1. Luis Corchón & Matthias Dahm, 2010. "Foundations for contest success functions," Economic Theory, Springer, vol. 43(1), pages 81-98, April.
  2. Gil S. Epstein & Shmuel Nitzan, 2002. "Politics of Randomness," CESifo Working Paper Series 803, CESifo Group Munich.
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  4. Birendra K. Rai & Rajiv Sarin, 2007. "Generalized Contest Success Functions," Jena Economic Research Papers 2007-082, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
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  9. 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.
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  11. Skaperdas, Stergios & Gan, Li, 1995. "Risk Aversion in Contests," Economic Journal, Royal Economic Society, vol. 105(431), pages 951-62, July.
  12. Warneryd, Karl, 1998. "Distributional conflict and jurisdictional organization," Journal of Public Economics, Elsevier, vol. 69(3), pages 435-450, September.
  13. Kolm, Serge-Christophe, 1976. "Unequal inequalities. II," Journal of Economic Theory, Elsevier, vol. 13(1), pages 82-111, August.
  14. Konrad, Kai A., 2009. "Strategy and Dynamics in Contests," OUP Catalogue, Oxford University Press, number 9780199549603, March.
  15. Pollak, Robert A, 1971. "Additive Utility Functions and Linear Engel Curves," Review of Economic Studies, Wiley Blackwell, vol. 38(116), pages 401-14, October.
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  17. Stergios Skaperdas & Samarth Vaidya, 2008. "Persuasion as a Contest," Economics Series 2008_07, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance.
  18. Debraj Ray & Kaoru Ueda, 1996. "Egalitarianism and Incentives," Boston University - Institute for Economic Development 73, Boston University, Institute for Economic Development.
  19. Che,Y.K. & Gale,I., 1998. "Difference-form contests and the robustness of all-pay auctions," Working papers 6, Wisconsin Madison - Social Systems.
  20. Konrad, Kai A., 2007. "Strategy in contests: an introduction
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    ," Discussion Papers, Research Unit: Market Processes and Governance SP II 2007-01, Social Science Research Center Berlin (WZB).
  21. Hao Jia, 2008. "A stochastic derivation of the ratio form of contest success functions," Public Choice, Springer, vol. 135(3), pages 125-130, June.
  22. 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.
  23. Drazen Prelec, 1998. "The Probability Weighting Function," Econometrica, Econometric Society, vol. 66(3), pages 497-528, May.
  24. 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.
  25. Andrew Yates, 2011. "Winner-pay contests," Public Choice, Springer, vol. 147(1), pages 93-106, April.
  26. Liu, Shulin & Wang, Mingxi, 2010. "Sealed-bid auctions based on Cobb-Douglas utility function," Economics Letters, Elsevier, vol. 107(1), pages 1-3, April.
  27. Kolm, Serge-Christophe, 1976. "Unequal inequalities. I," Journal of Economic Theory, Elsevier, vol. 12(3), pages 416-442, June.
  28. 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 971-78, September.
  29. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-91, March.
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