A Threshold Interpretation of the Ratio-Form Contest Success Function

Abstract

Ratio-form contest success functions have been widely used due to their appealing axiomatic properties. Existing microfoundational models offer additional justifications for their use in specific economic applications. I propose a new structure under which a ratio-form contest success function can be derived as a limit result using an underlying contest with multiple rounds and threshold success levels. This model generalizes the stochastic equivalence of ratio-form contest success functions and patent race games, allowing greater fl exibility in the underlying structural interpretation. I additionally formulate a spatial interpretation of the model and apply the general structure to existing models of conflict.