own-stake (“income”) effect, when i=j. The former effect is ambiguous, depending
on the sign of the cross-partial derivative of the contest success function. The latter
effect is clear-cut, due to our assumption that the marginal winning probability of a
contestant is declining in his own effort.
In case (ii) with i=H and case (iii) with i=L,
*
∂xH 1(
∂2 PrL
∂I B
I ∂Xl 2
Ï
η h nL
J
and
∂ x * L
∂I
BI ∂x j ∂x„
LH
ηn
HL
In cases (iii) with i=H and case (ii) with i=L,
∂I
P-
√'x H dx L
ηn
LH
and
∂I
∂2 PrH
2HηL
∂xH
λ∣
nH
J
We therefore obtain
Proposition 1:
In case (ii) with i=H and case (iii) with i=L,
∂ x *
∂∣
L ∂2 Pr
l- )=Sign ( —--L-ηH ).
∂x ∂x
LH
∂ x *
Sigπ( )Sigπ (ηh ) and Sign(
∂I
In cases (iii) with i=H and case (ii) with i=L,
* *2
Sign( )Sign (ηL ) and Sign(--^)=Sign ( ” ηL ).
∂ I ∂ I ∂x ∂x
HL
Proposition 1 directly yields the following general comparative statics result that
focuses on the sensitivity of a contestant’s effort to a change in his or his rival’s stake:
∂ H 1 1 ∂ x * H Corollary 1.1: ----- dnH |
> 0, |
∂ x * L |
> 0, |
∂ x *H Sign (—-- ∂nL |
∂2 P- ) = Sign ( —ʒɪ ) ∂x ∂x HL |
and |
Sign( |
∂ x * L ) |
∂2 Pr = Sign ( —-L- ). |
∂nH ∂xL ∂xH
By this first corollary, under our general contest success function, the effort exerted
by a contestant is positively related to his stake. That is, the strategic own-stake
(“income”) effect is always positive (effort of every player is a “normal good”). In
contrast, the effort exerted by a player can be positively or negatively related to the
stake of his rival. It can also be independent of the rival’s stake. When the marginal
12
More intriguing information
1. The name is absent2. The name is absent
3. TOWARD CULTURAL ONCOLOGY: THE EVOLUTIONARY INFORMATION DYNAMICS OF CANCER
4. The name is absent
5. sycnoιogιcaι spaces
6. The name is absent
7. Categorial Grammar and Discourse
8. Perfect Regular Equilibrium
9. PER UNIT COSTS TO OWN AND OPERATE FARM MACHINERY
10. ISSUES IN NONMARKET VALUATION AND POLICY APPLICATION: A RETROSPECTIVE GLANCE