Contests with general preferences

Dickson, Alexander and MacKenzie, Ian and Sekeris, Petros (2016) Contests with general preferences. Working paper. Strathclyde Discussion Papers in Economics, Glasgow.

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    Abstract

    This article investigates contests when heterogeneous players compete to obtain a share of a prize. We prove the existence and uniqueness of the Nash equilibrium when players have general preference structures. Our results show that many of the standard conclusions obtained in the analysis of contests - such as aggregate effort increasing in the size of the prize and the dissipation ratio invariant to the size of the prize — may no longer hold under a general preference setting. We derive the key conditions on preferences, which involve the rate of change of the marginal rate of substitution between a player’s share of the prize and their effort within the contest, under which these counter-intuitive results may hold. Our approach is able to nest conventional contest analysis — the study of (quasi-)linear preferences — as well as allowing for a much broader class of utility functions, which include both separable and non-separable utility structures.

    Creators(s): Dickson, Alexander ORCID logoORCID: https://orcid.org/0000-0001-9386-9036, MacKenzie, Ian and Sekeris, Petros;
    Item type:Monograph(Working paper)
    ID code:57020
    Keywords:contest, general preferences, aggregative game, Economic Theory, Economics, Econometrics and Finance(all)
    Subjects:Social Sciences > Economic Theory
    Department:Strathclyde Business School > Economics
    Depositing user: Pure Administrator
    Date deposited:21 Jul 2016 10:33
    Last modified:03 Apr 2020 01:59
    URI:https://strathprints.strath.ac.uk/id/eprint/57020
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