Contests with draws: axiomatization and equilibrium

Vesperoni, Alberto; Yildizparlak, Anil

Abstract

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).

Citation

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
• Journal: Economic Inquiry
• Print ISSN: 0095-2583
• Electronic ISSN: 1465-7295
• Publisher: Wiley
• Peer Reviewed: Peer Reviewed
• Volume: 57
• Issue: 3
• Pages: 1597-1616
• DOI: https://doi.org/10.1111/ecin.12780
• Public URL: https://durham-repository.worktribe.com/output/1307781