Contests with draws: axiomatization and equilibrium
Vesperoni, Alberto; Yildizparlak, Anil
We introduce and axiomatize a class of single‐winner contest success functions that embody the possibility of a draw. We then analyze the game of contest that our success functions induce, having different prizes delivered in the occurrence of a win and a draw. We identify conditions for the existence and uniqueness of a symmetric interior Nash equilibrium and show that equilibrium efforts and equilibrium rent dissipation can be larger than in a Tullock contest (with no possibility of a draw) due to increased competition even if the draw‐prize is null. These results suggest that a contest designer may profit from introducing the possibility of a draw. Finally, we show that this approach naturally extends to multiprize contests with multiple draws across different subsets of the set of players. (JEL C72, D72, D74).
Vesperoni, A., & Yildizparlak, A. (2019). Contests with draws: axiomatization and equilibrium. Economic Inquiry, 57(3), 1597-1616. https://doi.org/10.1111/ecin.12780
|Journal Article Type||Article|
|Acceptance Date||Feb 15, 2019|
|Online Publication Date||Mar 14, 2019|
|Publication Date||Jul 31, 2019|
|Deposit Date||Feb 19, 2019|
|Publicly Available Date||Mar 14, 2020|
|Peer Reviewed||Peer Reviewed|
Accepted Journal Article
This is the accepted version of the following article: Vesperoni, Alberto & Yildizparlak, Anil (2019). Contests with draws: axiomatization and equilibrium. Economic Inquiry 57(3): 1597-1616 which has been published in final form at https://doi.org/10.1111/ecin.12780. This article may be used for non-commercial purposes in accordance With Wiley Terms and Conditions for self-archiving.
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