Economic, social, political, and technical aspects are often described as contests where the competing entities (called agents or players) can use limited resources of different types to change the likelihood of winning prizes. The way prizes are awarded in order to maximize the desired goal is a central issue within contest theory.
By pursuing a balanced approach to theory, research, and practice, this book offers “comprehensive coverage of contest theory as developed in economics, computer science, and statistics.” Discussing these specific aspects, the book is primarily targeted at professionals, researchers, and graduate students who wish to explore research topics and apply contest theory results. At the same time, it works as a textbook for both students and self-study enthusiasts.
Contest theory is written in an easy reading style with theoretical solid arguments, first presenting basic concepts and then going into more detail. The content is very well selected. Theorems and examples are supplied with detailed proofs. The book is organized into ten chapters plus an appendix (chapter 11). Each chapter has a summary and exercises, allowing readers to test their knowledge of the issues.
Chapter 1, “Introduction and Preview,” presents an introduction to contest theory based on suggestive examples from sports, economics, and scientific areas, and introduces the basic concepts, goals, and terminology related to the subject. In chapter 2, “Standard All-Pay Contest,” games with complete and incomplete information are presented. Contests that award one or more placement prizes based on individual performance rank for games with both incomplete and complete information are explained in detail in chapter 3, “Rank-Order Allocation of Prizes.” In chapter 4, “Smooth Allocation of Prizes,” the smooth allocation mechanism is introduced; general-logit contest success functions, proportional allocation, ratio-form allocation, weighted proportional allocation, weighted valuation allocation, optimal prior-free contest design, and difference-form prize allocation are explained in detail. Standard all-pay contests, standard all-pay contests with budgets, proportional allocation, and equal sharing allocation are surveyed in chapter 5, “Simultaneous Contests.” In chapter 6, “Utility Sharing and Welfare,” utility maximization games, efficient and inefficient production systems, monotone valid utility games, social efficiency and the marginal contribution condition, proportional allocation, contribution order allocation, and equal-share allocation are explained. In chapter 7, “Sequential Contests” are presented and thoroughly exemplified. In chapter 8, “Tournaments,” basic concepts are introduced; seedings for tournaments of two-player matches and strategic behavior and production costs are presented. Chapter 9, “Rating Systems,” focuses on the statistical estimation of skills, and chapter 10, “Ranking Methods,” on the ranking of the players.
To conclude, Contest theory makes contest theory easy and interesting. The author strikes a perfect balance between theory and technique. Because of its special content, I strongly recommend this book to anyone who wants to learn the basics of contest theory.
