Optimal Accuracy of Unbiased Tullock Contests with Two Heterogeneous Players

Faculty/Professorship: Economic Theory  
Author(s): Sahm, Marco  
Title of the Journal: Games
ISSN: 2073-4336
Corporate Body: Molecular Diversity Preservation International (MDPI)
Publisher Information: Basel
Year of publication: 2022
Volume: 13
Issue: 2
Pages: 6
Language(s): English
DOI: 10.3390/g13020024
I characterize the optimal accuracy level r of an unbiased Tullock contest between two players with heterogeneous prize valuations. The designer maximizes the winning probability of the strong player or the winner’s expected valuation by choosing a contest with an all-pay auction equilibrium (r≥2). By contrast, if she aims at maximizing the expected aggregate effort or the winner’s expected effort, she will choose a contest with a pure-strategy equilibrium, and the optimal accuracy level r<2 decreases in the players’ heterogeneity. Finally, a contest designer who faces a tradeoff between selection quality and minimum (maximum) effort will never choose a contest with a semi-mixed equilibrium.
GND Keywords: Spieltheorie; Auktionstheorie; Wettbewerb; Gewinn; Wahrscheinlichkeit
Keywords: Tullock contest, heterogeneous valuations, accuracy, discrimination, optimal design, all-pay auction
DDC Classification: 330 Economics  
RVK Classification: QH 430   
Peer Reviewed: Ja
International Distribution: Ja
Open Access Journal: Ja
Type: Article
URI: https://fis.uni-bamberg.de/handle/uniba/56202
Release Date: 31. October 2022
Project: Open-Access-Publikationskosten 2022 - 2024