The Attack-and-Defense Group Contests: Best-shot versus Weakest-link

This study analyzes a group contest in which one group (defenders) follows a weakest-link whereas the other group (attackers) follows a best-shot impact function. We fully characterize the Nash and coalition-proof equilibria and show that with symmetric valuation the coalition-proof equilibrium is unique up to the permutation of the identity of the active player in the attacker group. With asymmetric valuation it is always an equilibrium for one of the highest valuation players to be active; it may also be the case that the highest valuation players in the attacker group free-ride completely on a group-member with a lower valuation. However, in any equilibrium, only one player in the attacker group is active, whereas all the players in the defender group are active and exert the same effort. We also characterize the Nash and coalition-proof equilibria for the case in which one group follows either a best-shot or a weakest-link but the other group follows an additive impact function

Rank-order competition in the voluntary provision of impure public goods

Publicly provided goods often create differential payoffs due to timely or spatial distances of group members. We design and test a provision mechanism which utilizes rank competition to mitigate free-riding in impure public goods. In our Rank-Order Voluntary Contribution Mechanism (Rank-Order-VCM) group members compete via observable contributions for a larger share of the public good; high contributors receive preferential access (a larger share), while low contributors receive restricted access (a lower share). In a laboratory experiment Rank-Order-VCM elicits median contributions equal to the full endowment throughout the finitely played games with constant groups. In the control treatment, with randomly assigned ranks, the contributions are significantly lower and decline over time. We thus provide evidence of rank competition, in situations where discriminatory access to public goods is possible, being efficiency enhancing

Political institutions and debt crises

This paper shows that political institutions matter in explaining defaults on external and domestic debt obligations. We explore a large number of political and macroeconomic variables using a non-parametric technique to predict safety from default. The advantage of this technique is that it is able to identify patterns in the data that are not captured in standard probit analysis. We find that political factors matter, and do so in different ways for democratic and non-democratic regimes, and for domestic and external debt. In democracies, a parliamentary system or sufficient checks and balances almost guarantee the absence of default on external debt when economic fundamentals or liquidity are sufficiently strong. In dictatorships, high stability and tenure play a similar role for default on domestic debt

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

Innovation and Crowdsourcing Contests

In an innovation contest, an organizer seeks solutions to an innovation-related problem from a group of independent agents. Agents, who can be heterogeneous in their ability levels, exert efforts to improve their solutions, and their solution qualities are uncertain due to the innovation and evaluation processes. In this chapter, we present a general model framework that captures main features of a contest, and encompasses several existing models in the literature. Using this framework, we analyze two important decisions of the organizer: a set of awards that will be distributed to agents and whether to restrict entry to a contest or to run an open contest. We provide a taxonomy of contest literature, and discuss past and current research on innovation contests as well as a set of exciting future research directions

Strategically Equivalent Contests

Using a two-player Tullock-type contest, we show that intuitively and structurally different contests can be strategically equivalent. Strategically equivalent contests generate the same best response functions and, as a result, the same equilibrium efforts. However, strategically equivalent contests may yield different equilibrium payoffs. We propose a simple two-step procedure to identify strategically equivalent contests. Using this procedure, we identify contests that are strategically equivalent to the original Tullock contest, and provide new examples of strategically equivalent contests. Finally, we discuss possible contest design applications and avenues for future theoretical and empirical research

National business regulations and city entrepreneurship in Europe: a multilevel nested analysis

This article provides and tests a theoretical framework with a multilevel (country–city) nested model to analyze the relationship between national business regulations (NBRs) and city level entrepreneurship. While public interest theory predicts a positive relationship between NBR and city level entrepreneurship, public choice theory predicts the opposite, a negative relationship. Based on multilevel analysis for a matched country–city panel of 228 cities across 20 European countries for the years 2004 to 2009, the empirical evidence from panel data estimation explains how changes in NBRs influence changes in city level entrepreneurial activity over time

Taxation and democracy

In this study we are examining the validity of relationship between level of taxation and democracy, using a panel-model approach. The data-set covers the period 2002-2008, including 51 states. The main finding stresses that the assumed function are nonlinear, and has a quadratic U-shape