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Contests with draws : axiomatization and equilibrium.

Vesperoni, Alberto and Yildizparlak, Anil (2019) 'Contests with draws : axiomatization and equilibrium.', Economic inquiry., 57 (3). pp. 1597-1616.

Abstract

We introduce and axiomatize a class of single‐winner contest success functions that embody the possibility of a draw. We then analyze the game of contest that our success functions induce, having different prizes delivered in the occurrence of a win and a draw. We identify conditions for the existence and uniqueness of a symmetric interior Nash equilibrium and show that equilibrium efforts and equilibrium rent dissipation can be larger than in a Tullock contest (with no possibility of a draw) due to increased competition even if the draw‐prize is null. These results suggest that a contest designer may profit from introducing the possibility of a draw. Finally, we show that this approach naturally extends to multiprize contests with multiple draws across different subsets of the set of players. (JEL C72, D72, D74).

Item Type:Article
Full text:(AM) Accepted Manuscript
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Status:Peer-reviewed
Publisher Web site:https://doi.org/10.1111/ecin.12780
Publisher statement:This is the accepted version of the following article: Vesperoni, Alberto & Yildizparlak, Anil (2019). Contests with draws: axiomatization and equilibrium. Economic Inquiry 57(3): 1597-1616 which has been published in final form at https://doi.org/10.1111/ecin.12780. This article may be used for non-commercial purposes in accordance With Wiley Terms and Conditions for self-archiving.
Date accepted:15 February 2019
Date deposited:19 February 2019
Date of first online publication:14 March 2019
Date first made open access:14 March 2020

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