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Difference-Form Persuasion Contests

Author

Listed:
  • Stergios Skaperdas

    (Department of Economics, University of California-Irvine University)

  • Amjad Toukan

    (Department of Economics, Lebanese American University of Beirut)

  • Samarth Vaidya

    (Department of Economics, Deakin Business School, Deakin University)

Abstract

We explore the equilibrium properties of two types of "difference-form" persuasion contest functions derived in Skaperdas and Vaidya (2012) in which contestants spend resources to persuade an audience. We find that that both types of functions generate interior pure strategy Nash equilibria unlike Baik (1998) and Che and Gale (2000) with characteristics different to existing literature. For one type of function, we find that the reaction function of each player is "flat" and non-responsive to the level of resources devoted by the rival so that the "preemption effect" as defined by Che and Gale (2000) is absent. Further, the equilibrium is invariant to the sequencing of moves. For the second type of function which applies when there is asymmetry among contestants with regards to the quality of evidence, we find that the reaction functions of the stronger and weaker players have gradients with opposite signs relative to Dixit (1987) and therefore their incentive to pre-commit expenditures in a sequential move game is also different. For both types of functions, the extent of rent dissipation is partial. From the equilibrium analysis, we are also able to establish the potential effects of some specific factors affecting persuasion such as evidence potency, the degree of truth and bias on aggregate resource expenditures and welfare.

Suggested Citation

  • Stergios Skaperdas & Amjad Toukan & Samarth Vaidya, 2015. "Difference-Form Persuasion Contests," Working Papers 141512, University of California-Irvine, Department of Economics.
  • Handle: RePEc:irv:wpaper:141512
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    Cited by:

    1. Stergios Skaperdas & Samarth Vaidya, 2016. "Contested Persuasion," Working Papers 161704, University of California-Irvine, Department of Economics.
    2. Carmen Beviá & Luis Corchón, 2022. "Contests with dominant strategies," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 74(4), pages 1-19, November.
    3. Sakshi Gupta & Ram Singh, 2018. "On Existence and Properties of Pure-strategy Equilibria under Contests," Working papers 288, Centre for Development Economics, Delhi School of Economics.
    4. Pau Balart & Sabine Flamand & Oliver Gürtler & Orestis Troumpounis, 2018. "Sequential choice of sharing rules in collective contests," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 20(5), pages 703-724, October.
    5. Makoto Yano & Takashi Komatsubara, 2018. "Price competition or price leadership," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 66(4), pages 1023-1057, December.

    More about this item

    Keywords

    Rent-seeking; Lobbying; Litigation; Contest functions;
    All these keywords.

    JEL classification:

    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General

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