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Economic Theory

, Volume 43, Issue 1, pp 81–98 | Cite as

Foundations for contest success functions

  • Luis Corchón
  • Matthias Dahm
Research Article

Abstract

In the literature, the outcome of contests is either interpreted as win probabilities or as shares of the prize. With this in mind, we examine two approaches to contest success functions (CSFs). In the first, we analyze the implications of contestants’ incomplete information concerning the ‘type’ of the contest administrator. While in the case of two contestants this approach can rationalize prominent CSFs, we show that it runs into difficulties when there are more agents. Our second approach interprets CSFs as sharing rules and establishes a connection to bargaining and claims problems which is independent of the number of contestants. Both approaches provide foundations for popular CSFs and guidelines for the definition of new ones.

“The strategic approach also seeks to combine axiomatic cooperative solutions and non-cooperative solutions. Roger Myerson recently named this task the ‘Nash program’.”(Rubinstein 1985, p. 1151)

Keywords

Endogenous contests Contest success function Nash bargaining solution Bargaining with claims 

JEL Classification

C72 D72 D74 

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Copyright information

© Springer-Verlag 2008

Authors and Affiliations

  1. 1.Departamento de EconomíaUniversidad Carlos III de MadridGetafe (Madrid)Spain
  2. 2.Departament d’EconomiaUniversitat Rovira i VirgiliReus (Tarragona)Spain

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