Relative Difference Contest Success Function

28 Pages Posted: 6 Mar 2012 Last revised: 7 Sep 2015

Carmen Bevia

Universidad de Alicante

Luis C. Corchón

Universidad Carlos III de Madrid - Department of Economics

Date Written: May 29, 2013

Abstract

In this paper we present a Contest Sucess Function (CSF) which is homogeneous of degree zero and where the probabilities of winning the prize depend on the relative difference of efforts. With two agents, we present a necessary and sufficient condition for the existence of a Nash Equilibrium in pure strategies. This equilibrium is unique and interior. This condition does not depend on the size of the valuations as in absolute difference CSF. We prove that several properties of Nash equilibrium and Leader-Follower equilibrium with the Tullock CSF still hold in our framework. Finally, we consider the case of n players, generalize the previous condition and show that it is sufficient for the existence of a unique Nash equilibrium in pure strategies.

Keywords: contest success functions, homogeneity of degree zero, difference

Suggested Citation

Bevia, Carmen and Corchón, Luis C., Relative Difference Contest Success Function (May 29, 2013). Available at SSRN: https://ssrn.com/abstract=2017279 or http://dx.doi.org/10.2139/ssrn.2017279

Carmen Bevia

Universidad de Alicante ( email )

Campus de San Vicente, sn
Alicante, 03690
Spain

Luis Carlos Corchón Diaz (Contact Author)

Universidad Carlos III de Madrid - Department of Economics ( email )

Calle Madrid 126
Getafe, 28903
Spain

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