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Winner‐pay contests with a no‐winner possibility

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  • Yizhaq Minchuk

Abstract

We study winner‐pay Tullock contests with a no‐win parameter that reflects the likelihood that nobody will win the contest, in a symmetric model with complete information. We show that in contradiction to standard Tullock contests with a no‐win parameter, the increase in the no‐win parameter results in higher efforts. Additionally, a no‐win parameter will result in lower revenues for the contest designer and lower contestants profits than standard winner‐pay contests. We additionally extended our work to the asymmetric case and equivalent contests.

Suggested Citation

  • Yizhaq Minchuk, 2022. "Winner‐pay contests with a no‐winner possibility," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(6), pages 1874-1879, September.
    • Handle: RePEc:wly:mgtdec:v:43:y:2022:i:6:p:1874-1879
    DOI: 10.1002/mde.3495
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    References listed on IDEAS

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    1. Subhasish Chowdhury & Roman Sheremeta, 2011. "A generalized Tullock contest," Public Choice, Springer, vol. 147(3), pages 413-420, June.
    2. Cohen Chen & Sela Aner, 2007. "Contests with Ties," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 7(1), pages 1-18, December.
    3. Yizhaq Minchuk, 2021. "Reimbursement as a tool to reduce sabotaging in rent‐seeking contests," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(1), pages 235-238, January.
    4. Andrew Yates, 2011. "Winner-pay contests," Public Choice, Springer, vol. 147(1), pages 93-106, April.
    5. Konrad, Kai A., 2009. "Strategy and Dynamics in Contests," OUP Catalogue, Oxford University Press, number 9780199549603.
    6. Skaperdas, Stergios & Gan, Li, 1995. "Risk Aversion in Contests," Economic Journal, Royal Economic Society, vol. 105(431), pages 951-962, July.
    7. Deng, Shanglyu & Wang, Xiruo & Wu, Zenan, 2018. "Incentives in lottery contests with draws," Economics Letters, Elsevier, vol. 163(C), pages 1-5.
    8. Roger D. Congleton & Arye L. Hillman (ed.), 2015. "Companion to the Political Economy of Rent Seeking," Books, Edward Elgar Publishing, number 15325, March.
    9. Alberto Vesperoni & Anil Yildizparlak, 2019. "Contests With Draws: Axiomatization And Equilibrium," Economic Inquiry, Western Economic Association International, vol. 57(3), pages 1597-1616, July.
    10. Alexander Matros & Daniel Armanios, 2009. "Tullock’s contest with reimbursements," Public Choice, Springer, vol. 141(1), pages 49-63, October.
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    Cited by:

    1. Franke, Jörg & Metzger, Lars P., 2023. "Repeated Contests with Draws," Ruhr Economic Papers 1016, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    2. Goel, Sumit & Goyal, Amit, 2023. "Optimal tie-breaking rules," Journal of Mathematical Economics, Elsevier, vol. 108(C).

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