Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/26204 
Year of Publication: 
2007
Series/Report no.: 
CESifo Working Paper No. 2160
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
From marketing and advertising to political campaigning and court proceedings, contending parties expend resources to persuade an audience of the correctness of their view. We examine how the probability of persuading the audience depends on the resources expended by the parties, so that persuasion can be modelled as a contest. We use a Bayesian approach whereby the audience makes inferences solely based on the evidence presented to them. The evidence is produced by the resources expended by the contending parties. We find conditions on evidence production and likelihood functions that yield the well-known additive contest success functions, including the logit function as well as the one used in all-pay auctions. We also find conditions that produce a difference” functional form. In all cases, there are three main determinants of which side the audience chooses: (i) the truth and other objective parameters of the environment; (ii) the biases of the audience as distilled in their priors and the likelihood function employed ; and (iii) the resources expended by the parties interested in persuading the audience.
Subjects: 
rent-seeking
advertising
litigation
political campaigning
property rights
JEL: 
C70
D20
D70
Document Type: 
Working Paper
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