A Micro- Foundation for Non-Deterministic Contests of the Logit Form

Matthias Dahm and Nicolás Porteiro

No 1410, Discussion Papers from Northwestern University, Center for Mathematical Studies in Economics and Management Science

Abstract: In models of non-deterministic contest, players exert irreversible effort in order to increase their probability of winning a prize. The most prominent functional form of the win probability in the literature is the so-called “logit” contest success function. We provide a simple micro-foundation of this function for the two contestant case. In this setting the contest administrator is a rational decision maker whose optimal choice is deterministic. However, from the point of view of the contestants the outcome of the contest is probabilistic because of an underlying uncertainty about the type of the administrator.

Keywords: Contests; Contest Success Function; Effort levels; Endogenous Contest. (search for similar items in EconPapers)
JEL-codes: C72 D72 D74 (search for similar items in EconPapers)
Date: 2005-07
New Economics Papers: this item is included in nep-upt
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Citations: View citations in EconPapers (3)

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