Contests with Draws: Axiomatization and Equilibrium

Anil Yildizparlak; Alberto Vesperoni

doi:10.1111/ecin.12780

Contests with Draws: Axiomatization and Equilibrium

Anil Yildizparlak
, Alberto Vesperoni

Political Economy

Assistant Professor, Department of Economics and FinanceDurham University Business School Mill Hill Lane, DH1 3LB, Durham UK

Research output: Contribution to journal › Article › peer-review

8 Citations (Scopus)

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	https://doi.org/10.1111/ecin.12780
Publication status	Published - Jul 2019

Access to Document

10.1111/ecin.12780

Cite this

@article{630e19177dae4978a9f338db42c7eda0,

title = "Contests with Draws: Axiomatization and Equilibrium",

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).",

author = "Anil Yildizparlak and Alberto Vesperoni",

year = "2019",

month = jul,

doi = "10.1111/ecin.12780",

language = "English",

volume = "57",

pages = "1597--1616",

journal = "ECONOMIC INQUIRY",

issn = "0095-2583",

publisher = "Wiley-Blackwell",

number = "3",

}

TY - JOUR

T1 - Contests with Draws

T2 - Axiomatization and Equilibrium

AU - Yildizparlak, Anil

AU - Vesperoni, Alberto

PY - 2019/7

Y1 - 2019/7

N2 - 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).

AB - 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).

UR - https://www.scopus.com/pages/publications/85062951561

U2 - 10.1111/ecin.12780

DO - 10.1111/ecin.12780

M3 - Article

SN - 0095-2583

VL - 57

SP - 1597

EP - 1616

JO - ECONOMIC INQUIRY

JF - ECONOMIC INQUIRY

IS - 3

ER -

Contests with Draws: Axiomatization and Equilibrium

Abstract

Access to Document

Other files and links

Fingerprint

Cite this