Hao Jia, Stergios Skaperdas, Samarth Vaidya
Contest functions (alternatively, contest success functions) determine probabilities of winning and losing as a function of contestants' effort. They are used widely in many areas of economics that employ contest games, from tournaments and rent-seeking to conflict and sports. We first examine the theoretical foundations of contest functions and classify them into four types of derivation: stochastic, axiomatic, optimally-derived, and microfounded. The additive form (which includes the ratio or �Tullock� functional form) can be derived in all four different ways. We also explore issues in the econometric estimation of contest functions, including concerns with data, endogeneity, and model comparison.
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