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Foundations for contest success functions

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Abstract

In the literature, the outcome of contests is either interpreted as win probabilities or as shares of the prize. With this in mind, we examine two approaches to contest success functions (CSFs). In the first, we analyze the implications of contestants’ incomplete information concerning the ‘type’ of the contest administrator. While in the case of two contestants this approach can rationalize prominent CSFs, we show that it runs into difficulties when there are more agents. Our second approach interprets CSFs as sharing rules and establishes a connection to bargaining and claims problems which is independent of the number of contestants. Both approaches provide foundations for popular CSFs and guidelines for the definition of new ones.

“The strategic approach also seeks to combine axiomatic cooperative solutions and non-cooperative solutions. Roger Myerson recently named this task the ‘Nash program’.”(Rubinstein 1985, p. 1151)

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Authors and Affiliations

  1. Departamento de Economía, Universidad Carlos III de Madrid, 28903, Getafe (Madrid), Spain

    Luis Corchón

  2. Departament d’Economia, Universitat Rovira i Virgili, 43204, Reus (Tarragona), Spain

    Matthias Dahm

Authors
  1. Luis Corchón
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  2. Matthias Dahm
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Correspondence to Matthias Dahm.

Additional information

This work has been partially carried out while Dahm was visiting Northwestern University (Kellogg School of Management, MEDS, CMS-EMS). The hospitality of this institution and the financial support of the Spanish Secretaría de Estado de Educación y Universidades with cofunding by the European Social Fund is gratefully acknowledged. The first author acknowledges financial support from the Spanish Ministerio de Educación y Ciencia, project SEJ2005-06167/ECON, and the second author acknowledges the financial support by the Barcelona GSE Research Network, the Departament d’Universitats, Recerca i Societat de la Informació (Generalitat de Catalunya), project 2005SGR00949, and by the Spanish Ministerio de Educación y Ciencia, project SEJ2007-67580-C02-01.

This paper is the melting of two independent projects. We are grateful for important input from Nicolás Porteiro and regret his decision not to coauthor the more extensive analysis of the present paper. We also wish to thank J. Atsu Amegashie, Miguel A. Ballester, Carmen Beviá, Steven Callander, Caterina Calsamiglia, Juan A. Crespo, Francesco De Sinopoli, Bard Harstad, Sjaak Hurkens, Carolina Manzano, Carlos Maravall, Antonio Quesada, Bernd Theilen, William Thomson and Cori Vilella for helpful comments. The suggestions by the editor C. D. Aliprantis and an anonymous referee substantially improved the analysis.

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Corchón, L., Dahm, M. Foundations for contest success functions. Econ Theory 43, 81–98 (2010). https://doi.org/10.1007/s00199-008-0425-x

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