Endogenous contest success functions: a mechanism design approach

Leonid Polishchuk and Alexander Tonis ()

Economic Theory, 2013, vol. 52, issue 1, 297 pages

Abstract: We describe optimal contest success functions (CSF) which maximize expected revenues of an administrator who allocates under informational asymmetry a source of rent among competing bidders. It is shown that in the case of independent private values rent administrator’s optimal mechanism can always be implemented via some CSFs as posited by Tullock. Optimal endogenous CSFs have properties which are often assumed a priori as plausible features of rent-seeking contests; the paper therefore validates such assumptions for a broad class of contests. Various extensions or optimal CSFs are analyzed. Copyright Springer-Verlag 2013

Keywords: Rent seeking; Contest success functions; Asymmetric information; Bayesian mechanism design; D72; D82; C73 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (29)

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DOI: 10.1007/s00199-011-0622-x

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