Biased contests for symmetric players

Drugov, Mikhail and Ryvkin, Dmitry (2016): Biased contests for symmetric players. Forthcoming in: Games and Economic Behavior

Abstract

In a biased contest, one of the players has an advantage in the winner determination process. We characterize a novel class of biased contest success functions pertaining to such contests and provide necessary and sufficient conditions for zero bias to be a critical point of arbitrary objectives satisfying certain symmetry restrictions. We, however, challenge the common wisdom that unbiased contests are always optimal when contestants are symmetric ex ante or even ex post. We show that contests with arbitrary favorites, i.e., biased contests of symmetric players, can be optimal in terms of various objectives such as expected aggregate effort, the probability to reveal the stronger player as the winner or expected effort of the winner.

• Item Type: MPRA Paper
• Language: English
• Keywords: Biased contest; Biased contest success function; Aggregate effort; Predictive power; Winner's effort
• Subjects: C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C72 - Noncooperative Games; D - Microeconomics > D6 - Welfare Economics > D63 - Equity, Justice, Inequality, and Other Normative Criteria and Measurement; D - Microeconomics > D7 - Analysis of Collective Decision-Making > D72 - Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior; J - Labor and Demographic Economics > J7 - Labor Discrimination > J71 - Discrimination

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