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Sharing contests with general preferences

Author

Listed:
  • Alex Dickson

    (Department of Economics, University of Strathclyde, Glasgow, UK, G4 0QU)

  • Ian A. MacKenzie

    (School of Economics, University of Queensland, Brisbane, Australia, 4072)

  • Petros G. Sekeris

    (Montpellier Business School, Montpellier, France)

Abstract

This article investigates contests when heterogeneous players compete to obtain a rent share. We prove the existence and uniqueness of the Nash equilibrium when players have general preferences. Our results show that the conventional wisdom in contests-such as a monotonically increasing relationship between effort and the size of the rent-may no longer hold. We derive the key conditions on preferences under which this is the case. By providing a much broader contest environment, our approach is able to nest conventional contest analysis as well as providing a rich framework that helps to explain many previously puzzling applications.

Suggested Citation

  • Alex Dickson & Ian A. MacKenzie & Petros G. Sekeris, 2016. "Sharing contests with general preferences," Discussion Papers Series 573, School of Economics, University of Queensland, Australia.
    • Handle: RePEc:qld:uq2004:573
    as

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    File URL: https://economics.uq.edu.au/files/46200/573.pdf
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    References listed on IDEAS

    as
    1. Brunnschweiler, Christa N. & Bulte, Erwin H., 2008. "The resource curse revisited and revised: A tale of paradoxes and red herrings," Journal of Environmental Economics and Management, Elsevier, vol. 55(3), pages 248-264, May.
    2. Chung, Tai-Yeong, 1996. "Rent-Seeking Contest When the Prize Increases with Aggregate Efforts," Public Choice, Springer, vol. 87(1-2), pages 55-66, April.
    3. Richard Cornes & Roger Hartley, 2005. "Asymmetric contests with general technologies," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 26(4), pages 923-946, November.
    4. Konrad, Kai A., 2009. "Strategy and Dynamics in Contests," OUP Catalogue, Oxford University Press, number 9780199549603, Decembrie.
    5. Richard Cornes & Roger Hartley, 2012. "Risk aversion in symmetric and asymmetric contests," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 51(2), pages 247-275, October.
    6. Nicolas Treich, 2010. "Risk-aversion and prudence in rent-seeking games," Public Choice, Springer, vol. 145(3), pages 339-349, December.
    7. Christa N. Brunnschweiler & Erwin H. Bulte, 2009. "Natural resources and violent conflict: resource abundance, dependence, and the onset of civil wars," Oxford Economic Papers, Oxford University Press, vol. 61(4), pages 651-674, October.
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    11. Szidarovszky, Ferenc & Okuguchi, Koji, 1997. "On the Existence and Uniqueness of Pure Nash Equilibrium in Rent-Seeking Games," Games and Economic Behavior, Elsevier, vol. 18(1), pages 135-140, January.
    12. Roger D. Congleton & Arye L. Hillman (ed.), 2015. "Companion to the Political Economy of Rent Seeking," Books, Edward Elgar Publishing, number 15325.
    13. Stergios Skaperdas, 1996. "Contest success functions (*)," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 7(2), pages 283-290.
    14. Dickson, Alex & Hartley, Roger, 2008. "The strategic Marshallian cross," Games and Economic Behavior, Elsevier, vol. 64(2), pages 514-532, November.
    15. Jindapon, Paan & Yang, Zhe, 2017. "Risk attitudes and heterogeneity in simultaneous and sequential contests," Journal of Economic Behavior & Organization, Elsevier, vol. 138(C), pages 69-84.
    16. Skaperdas, Stergios & Gan, Li, 1995. "Risk Aversion in Contests," Economic Journal, Royal Economic Society, vol. 105(431), pages 951-962, July.
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    More about this item

    Keywords

    contest; general preferences; aggregative game;
    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

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