Foundations for Contest Success Functions

with L Corchón, Economic Theory, 2010, DOI

In the literature, the outcome of contests is either interpreted as win probabilities or as shares of the prize. With this in mind, we examine two approaches to contest success functions (CSFs). In the first, we analyze the implications of contestants’ incomplete information concerning the ‘type’ of the contest administrator. While in the case of two contestants this approach can rationalize prominent CSFs, we show that it runs into difficulties when there are more agents. Our second approach interprets CSFs as sharing rules and establishes a connection to bargaining and claims problems which is independent of the number of contestants. Both approaches provide foundations for popular CSFs and guidelines for the definition of new ones.