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).
| Original language | English |
|---|---|
| Pages (from-to) | 1597-1616 |
| Journal | ECONOMIC INQUIRY |
| Volume | 57 |
| Issue number | 3 |
| Early online date | 14 Mar 2019 |
| DOIs | |
| Publication status | Published - Jul 2019 |