Contests with Complete and Incomplete Information: A Fresh Perspective.

Abstract:

We propose an alternative approach to modelling contests by introducing a new class of truncated polynomial probability-of-win functions. This framework allows for closed-form solutions in cases involving mixed-strategy equilibria or incomplete (private) information. Additionally, our approach accommodates an important class of contests where the leader’s marginal investment bestows a positive externality on the challenger’s marginal benefit of investment --- contrasting with classical models, where this externality is always negative. This distinction establishes a fundamental empowerment-suppression dichotomy in contests. We demonstrate that this distinction plays a crucial role in shaping comparative static theorems with respect to the degree of uncertainty in contests of incomplete information.

Constantine Sorokin, University of Glasgow