Optimal Accuracy of Unbiased Tullock Contests with Two Heterogeneous Players

Faculty/Professorship: Economic Theory  
Author(s): Sahm, Marco  
Publisher Information: Bamberg : Otto-Friedrich-Universität
Year of publication: 2022
Pages: 6
Source/Other editions: Games, 13 (2022), 2, 6 S. - ISSN: 2073-4336
is version of: 10.3390/g13020024
Year of first publication: 2022
Language(s): English
Licence: Creative Commons - CC BY - Attribution 4.0 International 
URN: urn:nbn:de:bvb:473-irb-562031
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   
Type: Article
URI: https://fis.uni-bamberg.de/handle/uniba/56203
Release Date: 12. January 2023
Project: Open-Access-Publikationskosten 2022 - 2024

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