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Contest functions: Theoretical foundations and issues in estimation

Hao Jia, Stergios Skaperdas and Samarth Vaidya

International Journal of Industrial Organization, 2013, vol. 31, issue 3, 211-222

Abstract: Contest functions (alternatively, contest success functions) determine probabilities of winning and losing as a function of contestants' effort. They are used widely in many areas of economics that employ contest games, from tournaments and rent-seeking to conflict and sports. We first examine the theoretical foundations of contest functions and classify them into four types of derivation: stochastic, axiomatic, optimally-derived, and microfounded. The additive form (which includes the ratio or “Tullock” functional form) can be derived in all four different ways. We also explore issues in the econometric estimation of contest functions, including concerns with data, endogeneity, and model comparison.

Keywords: Rent-seeking; Conflict; Tournaments; Litigation; Advertising (search for similar items in EconPapers)
JEL-codes: C72 D72 D74 L41 L23 M37 (search for similar items in EconPapers)
Date: 2013
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