Template-Type: ReDIF-Paper 1.0
Author-Name: Alex Dickson
Author-Name-First: Alex
Author-Name-Last: Dickson
Author-Email: alex.dickson@strath.ac.uk
Author-Workplace-Name: Department of Economics, University of Strathclyde
Author-Name: Ian A MacKenzie
Author-Name-First: Ian A
Author-Name-Last: MacKenzie
Author-Email: i.mackenzie@uq.edu.au
Author-Workplace-Name: School of Economics, University of Queensland
Author-Name: Petros  Sekeris
Author-Name-First: Petros 
Author-Name-Last: Sekeris
Author-Email: petros.sekeris@port.ac.uk
Author-Workplace-Name: Department of Economics & Finance, University of Portsmouth
Title: "Contests with general preferences"
Abstract: This article investigates contests when heterogeneous players compete to obtain a share of a prize.  We prove the existence and uniqueness of the Nash equilibrium when players have general preference structures.  Our results show that many of the standard conclusions obtained in the analysis of contests - such as aggregate effort increasing in the size of the prize and the dissipation ratio invariant to the size of the prize - may no longer hold under a general preference setting.  We derive the key conditions on preferences, which involve the rate of change of the marginal rate of substitution between a player's share of the prize and their effort within the contest, under which these counter-intuitive results may hold.  Our approach is able to nest conventional contest analysis - the study of (quasi-)linear preferences - as well as allowing for a much broader class of utility functions, which include both separable and non-separable utility structures.
Length: 19 pages
Creation-Date: 2016-06
Revision-Date: 
Publication-Status: Published
File-URL: http://www.strath.ac.uk/media/1newwebsite/departmentsubject/economics/research/researchdiscussionpapers/16-08.pdf
File-Format: Application/pdf
Number: 1608
Classification-JEL: C72, D72
Keywords: contest, general preferences, aggregative game
Handle: RePEc:str:wpaper:1608