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Simple equilibria in general contests

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  • Bastani, Spencer
  • Giebe, Thomas
  • Gürtler, Oliver

Abstract

We show how symmetric equilibria emerge in general two-player contests in which skill and effort are combined to produce output according to a general production technology and players have skills drawn from different distributions. The model includes the Tullock (1980) and Lazear and Rosen (1981) models as special cases. Our paper provides intuition regarding how the contest components interact to determine the incentive to exert effort and sheds new light on classic comparative statics results. In particular, we show that more heterogeneity can increase equilibrium effort.

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  • Bastani, Spencer & Giebe, Thomas & Gürtler, Oliver, 2022. "Simple equilibria in general contests," Games and Economic Behavior, Elsevier, vol. 134(C), pages 264-280.
    • Handle: RePEc:eee:gamebe:v:134:y:2022:i:c:p:264-280
    DOI: 10.1016/j.geb.2022.05.006
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    Cited by:

    1. Hanming Fang & Ming Li & Zenan Wu, 2022. "Tournament-Style Political Competition and Local Protectionism: Theory and Evidence from China," PIER Working Paper Archive 22-031, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    2. Goel, Sumit & Goyal, Amit, 2023. "Optimal tie-breaking rules," Journal of Mathematical Economics, Elsevier, vol. 108(C).
    3. Mikhail Drugov & Dmitry Ryvkin, 2020. "Hunting for the discouragement effect in contests," Working Papers w0278, New Economic School (NES).
    4. René Kirkegaard, 2020. "Microfounded Contest Design," Working Papers 2003, University of Guelph, Department of Economics and Finance.
    5. Thomas Giebe & Oliver Gürtler, 2024. "Player Strength and Effort in Contests," ECONtribute Discussion Papers Series 285, University of Bonn and University of Cologne, Germany.
    6. Subhasish M. Chowdhury & Patricia Esteve‐González & Anwesha Mukherjee, 2023. "Heterogeneity, leveling the playing field, and affirmative action in contests," Southern Economic Journal, John Wiley & Sons, vol. 89(3), pages 924-974, January.

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    More about this item

    Keywords

    Contest theory; Symmetric equilibrium; Heterogeneity; Risk; Stochastic dominance;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions

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