Inter and intra-group conflicts as a foundation for contest success functions

Yohan Pelosse

MPRA Paper from University Library of Munich, Germany

Abstract: This paper introduces a notion of partitioned correlated equilibrium that extends Aumann's correlated equilibrium concept (1974, 1987). This concept captures the non-cooperative interactions arising simultaneously within and between groups. We build on this notion in order to provide a foundation for contest success functions (CSFs) in a game wherein contests arise endogenously. Our solution concept and analysis are general enough to give a foundation for any model of contest using standard equilibrium concepts like e.g., Nash, Bayesian-Nash or Perfect-Nash equilibria. In our environment, popular CSFs can be interpreted as a list of equilibrium conjectures held by players whenever they contemplate deviating from the ``peaceful outcome'' of the ``group formation game''. Our setup allows to relate the form of prominent CSFs with some textbook examples of quasi-linear utility functions, social utility functions in the spirit of Fehr and Schmidt (1999) and non-expected models of utility a la Quiggin (1981, 1982). We also show that our framework can accommodate situations in which agents cannot correlate their actions.

Keywords: Contest success functions; Correlated equilibrium; Inter and intra-group conflicts; Induced contests (search for similar items in EconPapers)
JEL-codes: C72 D74 (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-cdm, nep-evo and nep-gth
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