Multiself Bargaining

I propose a dual-self model in which two selves have conflicting preferences over the action to be taken by an agent. Departing from existing dual-self models, the two selves are treated symmetrically. They have identical instantaneous utility, and only differ in their time preference. The default action of the agent is modelled as the outcome of a Tullock contest among the selves, where the self who wins chooses their preferred action. Viewing the outcome of this contest as the point of disagreement, the selves are allowed to negotiate to a mutually preferred outcome, and this negotiation is modelled as a Nash bargaining problem. I show that multiple well documented ‘behavioural’ deviations from standard utility maximizing behaviour can be generated from this model, including time inconsistent behaviour such as diminishing impatience, as well as violations of independence of irrelevant alternatives in choice problems. Notably the preference reversals from time inconsistency are ‘smooth’, as opposed to the singular reversal in quasi-hyperbolic discounting, the standard model used in the literature. Further, the model implies correlation of these deviations due to their dependence on the same parameters. Finally, this approach provides insight on evaluating the welfare effects of various interventions.

That’s the ticket: explicit lottery randomisation and learning in Tullock contests

Most laboratory experiments studying Tullock contest games find that bids significantly exceed the risk-neutral equilibrium predictions. We test the generalisability of these results by comparing a typical experimental implementation of a contest against the familiar institution of a ticket-based raffle. We find that in the raffle (1) initial bid levels are significantly lower and (2) bids adjust more rapidly towards expected-earnings best responses. We demonstrate the robustness of our results by replicating them across two continents at two university labs with contrasting student profiles.

The Undesirable Consequences of Doping Regulations: Why Stricter Efforts Might Strengthen Doping Incentives

We analyze the impact of doping regulations on the doping decisions of athletes in a Tullock contest. We show that stricter anti-doping regulations may increase the profits of doped athletes, which makes doping more sustainable in the long run. Under certain conditions, a naturally more able athlete may receive a lower payoff than his naturally less able competitor, reversing the natural payoff order. We consider the case of different anti-doping agencies and show that harmonization of doping regulations may increase the doping intensity. We point out incentive problems that may arise in the case of strategic interaction between anti-doping agencies.

Target Setting in Tournaments: Theory and Evidence from China

Motivated by the prevalence of economic targets at all levels of territory administration in China, this article proposes a Tullock contest model to study optimal target setting in a multi-layered tournament-based organisation. In our model, targets are used by upper-level officials to convey the importance of economic growth and incentivise subordinates in the tournaments. Our model predicts a top-down amplification of economic growth targets along the jurisdiction levels, which explains the observed pattern in China. Using both provincial and prefectural-level data, we test the model predictions and find consistent evidence.

Contest Theory and its Applications in Sports

This article describes how the theory of contests is applied to professional team sports leagues. It presents the traditional Tullock contest and explains some basic properties of the equilibrium. It then addresses the applications of contest theory in sports. It shows how the assumption of flexible vs. fixed talent supply depends on the league under consideration and how it influences the equilibria. The relationship between competitive balance and social welfare is considered. Finally, it illustrates why many clubs tend to “overinvest” in playing talent in many team sports leagues. It is noted that an exclusive focus on competitive balance may result in inefficient policy conclusions. Due to the contest structure, team sports leagues carry the risk of over-investing in playing talent. The contest theory is a suitable instrument to analyze team sports leagues from a theoretical point of view.

Transitional Dynamics in a Tullock Contest with a General Cost Function

This paper constructs and analyzes open-loop equilibria in an infinitely repeated Tullock contest in which two contestants contribute efforts to accumulate individual asset stocks over time. To investigate the transitional dynamics of the contest in the case of a general cost function, we linearize the model around the steady state. Our analysis shows that optimal asset stocks and their speed of convergence to the steady state crucially depend on the elasticity of marginal effort costs, the discount factor and the depreciation rate. In the case of a cost function with a constant elasticity of marginal costs, a lower discount factor, a higher depreciation rate and a lower elasticity imply a higher speed of convergence to the steady state. We further analyze the effects of second prizes in the contest. A higher prize spread increases individual and aggregate asset stocks, but does not alter the balance of the contest in the long run. During the transition, a higher prize spread increases asset stocks, produces a more balanced contest in each period and increases the speed of convergence to the steady state.