A General Framework for Studying Contests

50 Pages Posted: 19 Dec 2019 Last revised: 8 May 2020

See all articles by Spencer Bastani

Spencer Bastani

Linnaeus University - Department of Economics and Statistics

Thomas Giebe

Linnaeus University - Department of Economics and Statistics

Oliver Gürtler

University of Cologne

Multiple version iconThere are 2 versions of this paper

Date Written: April 28, 2020

Abstract

We develop a general framework for studying contests, including the well-known models of Tullock (1980) and Lazear & Rosen (1981) as special cases. The contest outcome depends on players' efforts and skills, the latter being subject to symmetric uncertainty. The model is tractable, because a symmetric equilibrium exists under general assumptions regarding production technologies and skill distributions. Using a link between our contest model and expected utility theory, we are able to derive new comparative statics results regarding how the size and composition of contests affect equilibrium effort, showing how standard results can be overturned. We also discuss the robustness of our results to changes in the information structure and the implications of our findings for the optimal design of teams.

Keywords: contest theory, symmetric equilibrium, heterogeneity, risk, decision theory

JEL Classification: C72, D74, D81, J23, M51

Suggested Citation

Bastani, Spencer and Giebe, Thomas and Gürtler, Oliver, A General Framework for Studying Contests (April 28, 2020). Available at SSRN: https://ssrn.com/abstract=3496773 or http://dx.doi.org/10.2139/ssrn.3496773

Spencer Bastani

Linnaeus University - Department of Economics and Statistics ( email )

Växjö, 351 06
Sweden

Thomas Giebe (Contact Author)

Linnaeus University - Department of Economics and Statistics ( email )

Växjö, 351 06
Sweden

Oliver Gürtler

University of Cologne ( email )

Albertus-Magnus-Platz
Cologne, 50923
Germany

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