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Tullock contest with reference‐dependent preferences

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  • Francesco Fallucchi
  • Francesco Trevisan

Abstract

We study the Tullock contest model with loss aversion and endogenously formed reference points. In a contest with n possibly heterogeneous players and convex effort costs, we establish sufficient conditions for a unique Nash equilibrium in pure strategies. Subsequently, we analyze the impact of loss aversion on players' spending behavior, probability of winning, and rent dissipation.

Suggested Citation

  • Francesco Fallucchi & Francesco Trevisan, 2024. "Tullock contest with reference‐dependent preferences," Economic Inquiry, Western Economic Association International, vol. 62(4), pages 1618-1628, October.
    • Handle: RePEc:bla:ecinqu:v:62:y:2024:i:4:p:1618-1628
    DOI: 10.1111/ecin.13251
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    References listed on IDEAS

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    1. Gill, David & Stone, Rebecca, 2015. "Desert and inequity aversion in teams," Journal of Public Economics, Elsevier, vol. 123(C), pages 42-54.
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    5. Gill, David & Stone, Rebecca, 2010. "Fairness and desert in tournaments," Games and Economic Behavior, Elsevier, vol. 69(2), pages 346-364, July.
    6. Kohei Daido & Takeshi Murooka, 2016. "Team Incentives and Reference‐Dependent Preferences," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 25(4), pages 958-989, December.
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    9. Fu, Qiang & Lyu, Youji & Wu, Zenan & Zhang, Yuanjie, 2022. "Expectations-based loss aversion in contests," Games and Economic Behavior, Elsevier, vol. 133(C), pages 1-27.
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