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A note on Poisson contests

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  • Nava Kahana
  • Doron Klunover

Abstract

We apply the environmental equivalence property of Poisson games (Myerson, In Int J Game Theory 27:375–392, 1998b ) to show that, in contests in which the number of contestants is a Poisson random variable with at least two expected contestants and a non-increasing return to effort, ex-ante aggregate effort is less than in a corresponding contest wherein the number of participants is equal to the expected number of contestants under uncertainty. Uncertainty about the number of participants in a rent-seeking contest seems natural. With rent-seeking contests attracting socially wasteful investments of effort or scarce resources, uncertainty generates a social benefit. Copyright Springer Science+Business Media New York 2015

Suggested Citation

  • Nava Kahana & Doron Klunover, 2015. "A note on Poisson contests," Public Choice, Springer, vol. 165(1), pages 97-102, October.
    • Handle: RePEc:kap:pubcho:v:165:y:2015:i:1:p:97-102
    DOI: 10.1007/s11127-015-0295-2
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    References listed on IDEAS

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    10. Park, Hyun & Philippopoulos, Apostolis & Vassilatos, Vanghelis, 2005. "Choosing the size of the public sector under rent seeking from state coffers," European Journal of Political Economy, Elsevier, vol. 21(4), pages 830-850, December.
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    Citations

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    Cited by:

    1. Arye L. Hillman & Ngo Van Long, 2017. "Rent Seeking: The Social Cost of Contestable Benefits," CESifo Working Paper Series 6462, CESifo.
    2. Christian Ewerhart & Federico Quartieri, 2020. "Unique equilibrium in contests with incomplete information," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 70(1), pages 243-271, July.
    3. Alex Dickson & Ian A. MacKenzie & Petros G. Sekeris, 2022. "Rent Dissipation in Simple Tullock Contests," Games, MDPI, vol. 13(6), pages 1-11, December.
    4. François Maublanc & Sébastien Rouillon, 2019. "Contests with an uncertain number of prizes," Cahiers du GREThA (2007-2019) 2019-07, Groupe de Recherche en Economie Théorique et Appliquée (GREThA).
    5. Kim, Bara & Yoo, Seung Han, 2021. "Population uncertainty and revealing contestants," Economics Letters, Elsevier, vol. 199(C).
    6. Kahana, Nava & Klunover, Doron, 2016. "Complete rent dissipation when the number of rent seekers is uncertain," Economics Letters, Elsevier, vol. 141(C), pages 8-10.
    7. Boosey, Luke & Brookins, Philip & Ryvkin, Dmitry, 2017. "Contests with group size uncertainty: Experimental evidence," Games and Economic Behavior, Elsevier, vol. 105(C), pages 212-229.
    8. Arye Hillman & Ngo Van Long, 2017. "The social cost of contestable benefits," CIRANO Working Papers 2017s-11, CIRANO.
    9. Boosey, Luke & Brookins, Philip & Ryvkin, Dmitry, 2019. "Contests between groups of unknown size," Games and Economic Behavior, Elsevier, vol. 113(C), pages 756-769.
    10. Maublanc, François & Rouillon, Sébastien, 2023. "Contests with an uncertain number of prizes with a fixed total value," Mathematical Social Sciences, Elsevier, vol. 121(C), pages 20-25.
    11. Jiao, Qian & Ke, Changxia & Liu, Yang, 2022. "When to disclose the number of contestants: Theory and experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 193(C), pages 146-160.
    12. Alex Dickson & Ian MacKenzie & Petros G Sekeris, 2020. "Rent dissipation in share contests," Working Papers 2014, University of Strathclyde Business School, Department of Economics.
    13. Luke Boosey & Philip Brookins & Dmitry Ryvkin, 2020. "Information Disclosure in Contests with Endogenous Entry: An Experiment," Management Science, INFORMS, vol. 66(11), pages 5128-5150, November.
    14. Jia, Hao & Sun, Ching-jen, 2021. "The optimal entry fee-prize ratio in Tullock contests," Journal of Mathematical Economics, Elsevier, vol. 96(C).
    15. Boris Ginzburg, 2021. "Optimal Price Of Entry Into A Competition," Economic Inquiry, Western Economic Association International, vol. 59(1), pages 280-286, January.

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    More about this item

    Keywords

    Contests; Population uncertainty; Poisson distribution; Rent dissipation; C72; D72; D82;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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