Incentives in lottery contests with draws

Deng, Shanglyu; Wang, Xiruo; Wu, Zenan

doi:10.1016/j.econlet.2017.11.028

Cited by 8 publications

(21 citation statements)

References 11 publications

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“…For the two‐player case, we find that equilibrium effort can be larger in the contest with draw, and this holds true even when a draw is equivalent to losing (i.e., when the draw‐prize is null), indicating an increase in the level of competition. This result is in sharp contrast to the equilibrium results in Jia () and Deng, Wang, and Wu () using the Loury–Blavatskyy model. Finally, although introducing the draw possibility always reduces equilibrium efforts when the number of players is three or more, we find that equilibrium rent dissipation (i.e., the share of the expected value of the delivered prize that corresponds to the value of the total exerted efforts in equilibrium) is systematically higher in a contest with draw compared to the contest without draw for a broad set of parameter configurations.…”

Section: Introductioncontrasting

confidence: 99%

“…As already mentioned in the previous section, equilibrium results of the game of contest using our class of success functions differ remarkably from the results in Jia () and Deng, Wang, and Wu () with the popular Loury–Blavatskyy model. There, individual and aggregate equilibrium efforts decline due to the introduction of a draw for a symmetric two‐player contest with null draw‐prize, while we show that both can increase under the same conditions with our class of success functions.…”

Section: Literaturesupporting

confidence: 44%

“…There, individual and aggregate equilibrium efforts decline due to the introduction of a draw for a symmetric two‐player contest with null draw‐prize, while we show that both can increase under the same conditions with our class of success functions. Deng, Wang, and Wu () also show that introducing the possibility of a draw can increase the winner's effort (but not the aggregate effort) if players' valuations are sufficiently asymmetric (but not if they are symmetric). While these results are not directly comparable to ours, they can be seen as alternative (and equally plausible) reasons for introducing the possibility of a draw in a contest.…”

Section: Literaturementioning

confidence: 99%

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Contests With Draws: Axiomatization and Equilibrium

Vesperoni

Yildizparlak

2019

Economic Inquiry

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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)

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Section: Introductioncontrasting

confidence: 99%

Section: Literaturesupporting

confidence: 44%

Section: Literaturementioning

confidence: 99%

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Contests With Draws: Axiomatization and Equilibrium

Vesperoni

Yildizparlak

2019

Economic Inquiry

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“…Compared to the model without draw, we also find that the aggregate effort in the group contest may be higher. This result is different with the finding in Deng et al [18] that the aggregate effort would decrease if the possibility of a draw is introduced into individual contests. We also find that when the values of the two groups are dispersed enough, introducing a draw would exclude the weak group from the contest and monopolization occurs.…”

Section: Introductioncontrasting

confidence: 99%

“…Generally, the models of group contests assume that the sum of winning probabilities across all groups adds up to one, which means the prize can be definitely assigned to one group. However, many real-world contests may end without a winner [18,25,44,47]. Many sports competitions, such as soccer, chess and cricket, can end in a tie.…”

Section: Introductionmentioning

confidence: 99%

An analysis of group contests with the possibility of a draw

Chang

Wang

2023

JIMO

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<p style='text-indent:20px;'>This paper investigates Tullock group contests with the possibility of a draw in which the winner, if any, shares the prize with other players in his group, and each group's sharing rule is private. Considering the draw is exogenously determined, we investigate the strategic choice of the sharing rules and individual effort. We find that introducing the draw into the contest has negative effects on individual payoff, while players would increase the sharing rule. When groups are symmetric, the possibility of a draw decreases all group's individual effort. In the model with asymmetric groups, the draw has a non-monotonic effect on the aggregate effort and individual effort of the strong group with larger value for the prize. Next, considering the draw is endogenously given, we investigate the strategy for maximizing aggregate effort. In the asymmetric model, when groups' values of the prize are dispersed enough or the organizer cares much more about the strong group, introducing a draw into the contest would increase the aggregate effort. However, no draw is most beneficial to the aggregate effort if the organizer puts more weight on the weak group. Finally, a numerical example is given to analyze and illustrate the results.</p>

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Winner‐pay contests with a no‐winner possibility

Minchuk

2021

Manage Decis Econ

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We study winner‐pay Tullock contests with a no‐win parameter that reflects the likelihood that nobody will win the contest, in a symmetric model with complete information. We show that in contradiction to standard Tullock contests with a no‐win parameter, the increase in the no‐win parameter results in higher efforts. Additionally, a no‐win parameter will result in lower revenues for the contest designer and lower contestants profits than standard winner‐pay contests. We additionally extended our work to the asymmetric case and equivalent contests.

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Incentives in lottery contests with draws

Cited by 8 publications

References 11 publications

Contests With Draws: Axiomatization and Equilibrium

Contests With Draws: Axiomatization and Equilibrium

An analysis of group contests with the possibility of a draw

Winner‐pay contests with a no‐winner possibility

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