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Properties of Contests

Author

Listed:
  • Luis C. Corchón
  • Marco Serena

Abstract

We aim at characterizing which kind of functions could be explained (rationalized) as the best reply of payoff-maximizing agents in contests for a fixed prize. We show that the rationalizability strongly differs between Decisive Contests, where the prize is allocated with certainty, and Possibly Indecisive Contests, where the prize may not be awarded. In the latter, any arbitrary set of best reply functions is rationalizable, thus "anything goes." In the former, best reply functions have to satisfy strong conditions in two-person contests. But with more than two contestants, we have a partial result showing that anything goes as well. We end the paper with an outline of possible applications of our results to R&D and labor markets.

Suggested Citation

  • Luis C. Corchón & Marco Serena, 2016. "Properties of Contests," Working Papers tax-mpg-rps-2018-10, Max Planck Institute for Tax Law and Public Finance.
    • Handle: RePEc:mpi:wpaper:tax-mpg-rps-2018-10
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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