Mediated Contests and Strategic Foundations for Contest Success Functions

This paper examines the foundations of arbitrary contest success functions (CSFs) in two distinct types of contests – unmediated and mediated contests. In an unmediated contest, CSFs arise as the (interim) players’ equilibrium beliefs of a two-stage game – the gun-butter game – in which players choose an activity (appropriative vs. productive) in the first stage, and apply effort to their activity in the second stage. In this view a CSF is rationalizable if a contest is induced on the equilibrium path of the gun-butter game. In the second approach, a CSF is the result of the optimal design of an administrator. Here, the designer seeks to maximize his utility by implementing a probability distribution on the set of contestants. However, he is curbed by a disutility term which represents the underlying institutional constraints or the designer’s preferences. Both approaches provide foundations for arbitrary CSFs with no restrictions on the number of contestants.Induced contests; Gun-butter game; Control costs

Sabotage in Contests: A Survey

A contest is a situation in which individuals expend irretrievable resources to win valuable prize(s). ‘Sabotage’ is a deliberate and costly act of damaging a rival’s' likelihood of winning the contest. Sabotage can be observed in, e.g., sports, war, promotion tournaments, political or marketing campaigns. In this article, we provide a model and various perspectives on such sabotage activities and review the economics literature analyzing the act of sabotage in contests. We discuss the theories and evidence highlighting the means of sabotage, why sabotage occurs, and the effects of sabotage on individual players and on overall welfare, along with possible mechanisms to reduce sabotage. We note that most sabotage activities are aimed at the ablest player, the possibility of sabotage reduces productive effort exerted by the players, and sabotage may lessen the effectiveness of public policies, such as affirmative action, or information revelation in contests. We discuss various policies that a designer may employ to counteract sabotage activities. We conclude by pointing out some areas of future research

Competitive Careers as a Way to Mediocracy

We show that incompetitive careers based on individual performance the least productive individuals may have the highest probabilities to be promoted to top positions. These individuals have the lowest fall-back positions and, hence, the highest incentives to succeed in career contests. This detrimental incentive effect exists irrespective of whether effort and talent are substitutes or complements in the underlying contest-success function. However, in case of complements the incentive effect may be be outweighed by a productivity effect that favors high effort choices by the more talented individuals

Simultaneous inter- and intra-group conflicts

Lecture on the first SFB/TR 15 meeting, Gummersbach, July, 18 - 20, 2004This paper models the trade-off between production and appropriation in the presence of simultaneous inter- and intra-group conflicts. The model exhibits a ‘group cohesion effect ’: if the contest between the groups becomes more decisive, or contractual incompleteness between groups becomes more serious, the players devote fewer resources to the intra-group conflict. Moreover, there is also a ‘reversed group cohesion effect’: if the intra-group contests become less decisive, or contractual incompleteness within groups becomes less serious, the players devote more resources to the inter-group contest. The model also sheds new light on normative questions. I derive exact conditions for when dividing individuals in more groups leads to more productive and less appropriative activities. Further, I show that there is an optimal size of the organization which is determined by a trade-off between increasing returns to scale in production and increasing costs of appropriative activities

Sabotage in Asymmetric Contests – An Experimental Analysis

In a contest players compete for winning a prize by effort and thereby increasing their probability of winning. Contestants, however, could also improve their own relative position by harming the other players. We experimentally analyze contests with heterogeneous agents who may individually sabotage each other. Our results suggest that sabotaging behavior systematically varies with the composition of different types of agents in a contest. Moreover, if the saboteur's identity is revealed sabotage decreases while retaliation motives prevail.Contest, Experiments, Sabotage, Tournament

Effects of prior contest experience and contest outcome on female reproductive decisions and offspring fitness

Winning or losing a prior contest can influence the outcome of future contests, but it might also alter subsequent reproductive decisions. For example, losers may increase their investment in the current breeding attempt if losing a contest indicates limited prospects for future breeding. Using the burying beetle Nicrophorus vespilloides, we tested whether females adjust their prehatching and posthatching reproductive effort after winning or losing a contest with a same-sex conspecific. Burying beetles breed on carcasses of small vertebrates for which there is fierce intrasexual competition. We found no evidence that winning or losing a contest influenced reproductive investment decisions in this species. Instead, we show that a female’s prior contest experience (regardless of its outcome) influenced the amount of posthatching care provided, with downstream consequences for the female’s reproductive output; both winners and losers spent more time provisioning food to their offspring and produced larger broods than females with no contest experience. We discuss the wider implications of our findings and present a conceptual model linking contest-mediated adjustments in parental investment to population-level processes. We propose that the frequency of intraspecific contests could both influence and be influenced by population dynamics in species where contest experience influences the size and/or number of offspring produced

On the "Adverse Selection" of Organizations

According to New Institutional Economics, two or more individuals will found an organization, if it leads to a benefit compared to market allocation. A natural consequence will then be internal rent seeking. We discuss the interrelation between profits, rent seeking and the foundation of organizations. Typically, we expect that highly profitable firms are always founded but it is not clear whether the same is true for firms with less optimistic prospects. We will show that internal rent seeking may lead to a completely reversed result. The impact of internal rent seeking on overall investment and the implications of firm size and competition on the foundation of organizations are also addressed

Sabotaging Potential Rivals

This paper studies sabotage in a contest with non-identical players. Unlike previous papers, we consider sabotage in an elimination contest and allow contestants to sabotage a potential or future rival. It turns out that for a certain partition of players there is a pure-strategy equilibrium in which only the most able contestant engages in sabotage while less able contestants do not. The most able contestant may therefore prefer a situation where sabotage is allowed to one where sabotage is not allowed. For another partition of players, there is a unique equilibrium in which none of the players invests in sabotage.all-pay auction, elimination contests, potential rival, sabotage

Al Qaeda and Jihadist Terrorism in the Light of Contest Theory, Empirical Evidence for the period 2004-2008

This paper finds an empirical evidence that al Qaeda behaves as a contest organizer rewarding a prize to candidate extremist groups. Would-be terrorists must then compete with each other to prove their commitment and ability. Hence to maximize their own probability of winning the prize, each group (maximizes its effort). In particular, in the presence of costless information each candidate group can observe the results of attacks of other groups. Therefore, each group tries to make attacks at least equally destructive as the foregoing attacks. The testable implication is that: the number of victims of terrorist attacks is associated with the number of victims of past attacks. Resulting evidence confirms the hypothesis. However, results show that al Qaeda-style jihadist terrorist activity depends also upon grievance for poverty and socio-economic conditions.Terrorism, al Qaeda, Contest Theory, Self-Starters, Tournament, Information.

How does the social distance between an employee and a manager affect employee competition for a reward?

This study examines how employees internalize differences in social distance between themselves and their managers when they are competing for a reward given by the manager. In an employer/employee relationship, this difference in social distance between the employer and the various employees leads to a disadvantageous situation for the socially distant workers when raises, promotions, special considerations etc. are given. Since social distance is present in most organizations, understanding how employees work effort changes in response to changes in social distance is of upmost importance. In prior literature, this disadvantage has always been assumed/shown to lead to lower effort than the advantaged worker. The results partially back up this claim and show that females who are socially distant from their manager contribute much less than females who are socially closer or males regardless of the social distance.Experiment, Social distance