IDEAS home Printed from https://ideas.repec.org/a/gam/jgames/v13y2022i2p24-d779221.html
   My bibliography  Save this article

Optimal Accuracy of Unbiased Tullock Contests with Two Heterogeneous Players

Author

Listed:
  • Marco Sahm

    (Department of Economics, Otto-Friedrich-Universität Bamberg, Feldkirchenstraße 21, 96052 Bamberg, Germany
    CESifo, Poschingerstraße 5, 81679 Munich, Germany)

Abstract

I characterize the optimal accuracy level r of an unbiased Tullock contest between two players with heterogeneous prize valuations. The designer maximizes the winning probability of the strong player or the winner’s expected valuation by choosing a contest with an all-pay auction equilibrium ( r ≥ 2 ). By contrast, if she aims at maximizing the expected aggregate effort or the winner’s expected effort, she will choose a contest with a pure-strategy equilibrium, and the optimal accuracy level r < 2 decreases in the players’ heterogeneity. Finally, a contest designer who faces a tradeoff between selection quality and minimum (maximum) effort will never choose a contest with a semi-mixed equilibrium.

Suggested Citation

  • Marco Sahm, 2022. "Optimal Accuracy of Unbiased Tullock Contests with Two Heterogeneous Players," Games, MDPI, vol. 13(2), pages 1-6, March.
    • Handle: RePEc:gam:jgames:v:13:y:2022:i:2:p:24-:d:779221
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2073-4336/13/2/24/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2073-4336/13/2/24/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Gil S. Epstein & Yosef Mealem & Shmuel Nitzan, 2013. "Lotteries vs. All-Pay Auctions in Fair and Biased Contests," Economics and Politics, Wiley Blackwell, vol. 25(1), pages 48-60, March.
    2. Camilla Mastromarco & Marco Runkel, 2009. "Rule changes and competitive balance in Formula One motor racing," Applied Economics, Taylor & Francis Journals, vol. 41(23), pages 3003-3014.
    3. Stergios Skaperdas, 1996. "Contest success functions (*)," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 7(2), pages 283-290.
    4. Ewerhart, Christian, 2017. "Revenue ranking of optimally biased contests: The case of two players," Economics Letters, Elsevier, vol. 157(C), pages 167-170.
    5. Subhasish M. Chowdhury & Patricia Esteve‐González & Anwesha Mukherjee, 2023. "Heterogeneity, leveling the playing field, and affirmative action in contests," Southern Economic Journal, John Wiley & Sons, vol. 89(3), pages 924-974, January.
    6. Alcalde, José & Dahm, Matthias, 2010. "Rent seeking and rent dissipation: A neutrality result," Journal of Public Economics, Elsevier, vol. 94(1-2), pages 1-7, February.
    7. Nti, Kofi O., 2004. "Maximum efforts in contests with asymmetric valuations," European Journal of Political Economy, Elsevier, vol. 20(4), pages 1059-1066, November.
    8. Wang Zhewei, 2010. "The Optimal Accuracy Level in Asymmetric Contests," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 10(1), pages 1-18, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Letina, Igor & Liu, Shuo & Netzer, Nick, 2023. "Optimal contest design: Tuning the heat," Journal of Economic Theory, Elsevier, vol. 213(C).
    2. Savin, Ivan & Mundt, Philipp, 2022. "Drivers of productivity change in global value chains: Reallocation vs. innovation," Economics Letters, Elsevier, vol. 220(C).
    3. Daske, Thomas & March, Christoph, 2024. "Efficient incentives with social preferences," Theoretical Economics, Econometric Society, vol. 19(3), July.
    4. Theofanis Tsoulouhas, 2023. "Advances in the Theory and Applications of Contests and Tournaments: Introduction to the Special Issue," Games, MDPI, vol. 14(2), pages 1-3, March.
    5. Schmitt, Sefanie Y. & Bruckner, Dominik, 2022. "Unaware consumers and disclosure of deficiencies," BERG Working Paper Series 178, Bamberg University, Bamberg Economic Research Group.
    6. Bruckner, Dominik & Sahm, Marco, 2023. "Party Politics: A Contest Perspective," VfS Annual Conference 2023 (Regensburg): Growth and the "sociale Frage" 277714, Verein für Socialpolitik / German Economic Association.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Marco Sahm, 2022. "Optimal Accuracy of Unbiased Tullock Contests with Two Heterogeneous Players," CESifo Working Paper Series 9601, CESifo.
    2. Subhasish M. Chowdhury & Patricia Esteve‐González & Anwesha Mukherjee, 2023. "Heterogeneity, leveling the playing field, and affirmative action in contests," Southern Economic Journal, John Wiley & Sons, vol. 89(3), pages 924-974, January.
    3. Goel, Sumit & Goyal, Amit, 2023. "Optimal tie-breaking rules," Journal of Mathematical Economics, Elsevier, vol. 108(C).
    4. Feng, Xin & Lu, Jingfeng, 2017. "Uniqueness of equilibrium in two-player asymmetric Tullock contests with intermediate discriminatory power," Economics Letters, Elsevier, vol. 159(C), pages 61-64.
    5. Yosef Mealem & Shmuel Nitzan, 2013. "Direct and Structural Discrimination in Contests," CESifo Working Paper Series 4518, CESifo.
    6. Ewerhart, Christian, 2017. "Revenue ranking of optimally biased contests: The case of two players," Economics Letters, Elsevier, vol. 157(C), pages 167-170.
    7. Bruckner, Dominik & Sahm, Marco, 2023. "Party Politics: A Contest Perspective," VfS Annual Conference 2023 (Regensburg): Growth and the "sociale Frage" 277714, Verein für Socialpolitik / German Economic Association.
    8. Yosef Mealem & Shmuel Nitzan, 2012. "Differential Prize Taxation and Structural Discrimination in Contests," CESifo Working Paper Series 3831, CESifo.
    9. Kawamori, Tomohiko, 2023. "Complete-rent-dissipation contest design," Economics Letters, Elsevier, vol. 232(C).
    10. Tomohiko Kawamori, 2020. "Extractive contest design," Papers 2006.01808, arXiv.org, revised Jul 2022.
    11. Laica, Christoph & Lauber, Arne & Sahm, Marco, 2021. "Sequential round-robin tournaments with multiple prizes," Games and Economic Behavior, Elsevier, vol. 129(C), pages 421-448.
    12. Dominik Bruckner & Marco Sahm, 2024. "Party Politics: A Contest Perspective," CESifo Working Paper Series 11474, CESifo.
    13. Franke, Jörg & Leininger, Wolfgang & Wasser, Cédric, 2018. "Optimal favoritism in all-pay auctions and lottery contests," European Economic Review, Elsevier, vol. 104(C), pages 22-37.
    14. Barbieri, Stefano & Serena, Marco, 2022. "Biasing dynamic contests between ex-ante symmetric players," Games and Economic Behavior, Elsevier, vol. 136(C), pages 1-30.
    15. Fu, Qiang & Wu, Zenan & Zhu, Yuxuan, 2023. "On equilibrium uniqueness in generalized multi-prize nested lottery contests," Games and Economic Behavior, Elsevier, vol. 139(C), pages 180-199.
    16. Paul Pecorino, 2020. "Bridge burning and escape routes," Public Choice, Springer, vol. 184(3), pages 399-414, September.
    17. Gil S. Epstein & Yosef Mealem, 2013. "Politicians, Governed vs. Non-Governed Interest Groups and Rent Dissipation," Working Papers 2013-09, Bar-Ilan University, Department of Economics.
    18. Ewerhart, Christian, 2017. "Contests with small noise and the robustness of the all-pay auction," Games and Economic Behavior, Elsevier, vol. 105(C), pages 195-211.
    19. Yosef Mealem & Shmuel Nitzan, 2014. "Equity and effectiveness of optimal taxation in contests under an all-pay auction," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 42(2), pages 437-464, February.
    20. Letina, Igor & Liu, Shuo & Netzer, Nick, 2023. "Optimal contest design: Tuning the heat," Journal of Economic Theory, Elsevier, vol. 213(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jgames:v:13:y:2022:i:2:p:24-:d:779221. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.