Optimal Accuracy of Unbiased Tullock Contests with Two Heterogeneous Players

Marco Sahm
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Marco Sahm: Department of Economics, Otto-Friedrich-Universität Bamberg, Feldkirchenstraße 21, 96052 Bamberg, Germany

Games, 2022, vol. 13, issue 2, 1-6

Abstract: 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.

Keywords: Tullock contest; heterogeneous valuations; accuracy; discrimination; optimal design; all-pay auction (search for similar items in EconPapers)
JEL-codes: C C7 C70 C71 C72 C73 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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