Pelosse, Yohan (2011): Inter and intra-group conflicts as a foundation for contest success functions.
Download (284Kb) | Preview
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.
|Item Type:||MPRA Paper|
|Original Title:||Inter and intra-group conflicts as a foundation for contest success functions|
|Keywords:||Contest success functions; Correlated equilibrium; Inter and intra-group conflicts; Induced contests|
|Subjects:||D - Microeconomics > D7 - Analysis of Collective Decision-Making > D74 - Conflict; Conflict Resolution; Alliances
C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C72 - Noncooperative Games
|Depositing User:||Yohan Pelosse|
|Date Deposited:||12. Jun 2011 15:16|
|Last Modified:||16. Feb 2013 14:09|
Alcalde, J., Dahm, M., 2007. Tullock and Hirshleifer: a meeting of the minds. Rev Econ Des 11, 101-124.
Aumann, R., 1974. Subjectivity and correlation in randomized strategies. J Math Econ. 1, 67-96.
Aumann, R., 1987. Correlated equilibrium as an expression of Bayesian rationality. Econometrica. 55, 1-18.
Baik, K.H., 1998. Difference-form contest success functions and effort levels in contests. Eur J Polit Econ. 14, 685-701.
Baye, M.R., Hoppe, H.C., 2003. The strategic equivalence of rent-seeking, innovation, and patent-race games. Games Econ Behav. 44, 217-226.
Bevia, C., Corchon L., 2010. Peace agreements without commitment. Games Econo Behav. 68, 469-487.
Bloch, F., 1996. Sequential formation of coalitions in games with externalities and fixed payoff division, Games Econ Behav 14, 90-123.
Bloch, F., Sánchez-Pagés, S., Soubeyran, R., 2006. When does universal peace prevail? Secession and group formation in conflict. Econ Gov. 7(1) 3-29.
Che, Y.-K., Gale, I., 2000. Difference-form contests and the robustness of all-pay auctions. Games Econ Behav. 30, 22-43.
Clark, D., Riis, C., 1998. Contest success functions: An extension. Econ. Theory. 11, 201-204.
Corchon., 2007. The theory of contests: a survey. rev Econ Design. 11, 69-100.
Corchon, L., Dahm, M., 2009. Welfare maximizing contest success functions when the planner cannot commit. , J Math Econ. (forthcoming)
Corchon, L., Dahm, M., 2010. Foundations for contest success functions. Econ Theory. 43, 81-98.
Epstein, G.S., Nitzan, S.: The politics of randomness. Soc Choice Welf 27, 423-433 (2006)
Esteban, J.M., Ray, D., 1999. Conflict and distribution. J Econ Theory. 87, 379-415.
Fehr, E., Schmidt, K.M., 1999. A theory of fairness, competition, and cooperation. Quart J Econ. 114(3), 817-868.
Fullerton, R L., McAfee R. Preston., 1999. Auctioning entry into tournaments, J Polit Econ. 107(3), 573-605.
Fu Q., Lu J., 2011. A Micro-Foundation for Generalized Multi-Prize Contests: A Noisy Ranking Perspective. Soc Choice Welf, forthcoming
Grossman, H.I., Kim M., 1995. Swords or plowshares? A theory of the security of claims to property. J Polit Econ. 103:1275-288.
Hart, S., Kurz M., 1983. Endogenous formation of coalitions, Econometrica. 51, 1047-1064.
Hillman, A.L., Riley, J.G., 1989. Politically contestable rents and transfers. Econ Polit 1(1), 17-39.
Hirshleifer, J., 1989. Conflict and rent-seeking success functions: ratio vs. difference models of relative success. Public Choice. 63, 101-112.
Hirshleifer, J., 1995. Anarchy and its breakdown. J Polit Econ. 103, 26-52.
Jackson M., Massimo M., 2009. Strategic militarization, deterrence and war between nations. Quart J Polit Science. 4, 279-313.
Konrad, K., 2009. Strategy and dynamics in contests. Oxford, UK: Oxford University Press.
Muthoo, A., 2004. A model of the origins of basic property rights, Games Econ Behav. 288-312.
Nitzan, S., 1994. Modelling rent-seeking contests. Eur. J. Polit. Econ. 10, 41-60.
Quiggin, J., 1981. Risk perception and risk aversion among australian farmers, Australian Jour Agr Econ. 25, 160-169.
Quiggin, J., 1982. A theory of anticipated utility. J Econ Behav Org. 3, 323-343.
Ray., D, Vohra, R., 1997. Equilibrium binding agreements. J Econ Theory. 73 30-78.
Schelling, T., 1960. The Strategy of Conflict, Harvard University Press, Cambridge, Massachusetts.
Schelling, T., 1978. Micromotives and Macrobehavior, New York: Norton.
Skaperdas, S., 1992. Cooperation, conflict, and power in the absence of property rights. Am Econ Rev 82:720-739.
Skaperdas, S., 1996. Contest success functions. Econ Theory 7, 283-290.
Tullock, G., 1980. Efficient rent seeking. In: Buchanan, J., Tollison, R., Tullock, G. (eds.) Toward a theory of the rent seeking society. College Station: Texas A\&M University Press, pp. 97-112.
Tversky, A., Kahneman, D., 1992. Advances in prospect theory: Cumulative representation of uncertainty, J Risk Uncertainty 5(4), 297-323.