Contests with delegation and initial probabilities of winning

Pan Sang Kang

Applied Economics Letters, 2023, vol. 30, issue 18, 2631-2636

Abstract: We study a two-player contest in which each player is endowed with an initial probability of winning the prize and hires a delegate who expends effort on each player’s behalf. We show that (i) the players’ equilibrium delegation contracts are monotonic in the initial probabilities of winning and the impact parameter; (ii) the delegates’ equilibrium effort levels are monotonic in the impact parameter but not in the initial probabilities of winning; and (iii) a contest designer may attain various objectives of contest design by choosing a proper value of the impact parameter.

Date: 2023
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DOI: 10.1080/13504851.2022.2102125

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