All-Moscow seminar "Mathematical methods of decision analysis in economics, business and politics".
On September 15, 2021, at 16:30, all-Moscow seminar "Mathematical methods of decision analysis in economics, business and politics" took place.
Speaker: Constantine Sorokin (University of Glasgow, UK), Alexander Matros (Universities of North Carolina, USA, and Lancester, UK)
We propose an alternative strategy of modelling contests by introducing a new class of truncated polynomial probability-of-winning functions. Our approach permits finding a closed form solution and obtaining valuable comparative static results not only for the complete information case, (both for mixed and pure strategies), but also for the case of incomplete (private) information. Particularly, we are able to address an important question of information design in contests. In addition, this approach also allows to explore the case when a further increase in maximal effort exerted in a contest bestows a positive externality on other contenders with lower efforts, increasing their marginal probability of winning. We argue that this situation usually arises in R&D competition and patent races and cannot be modelled by standard Tullock-style contest models.