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Endogenous timing in general rent-seeking and conflict models

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  • Hoffmann, Magnus
  • Rota-Graziosi, Grégoire

Abstract

We examine simultaneous versus sequential choice of effort in a two-player contest. The timing of moves, determined in a preplay stage prior to the contest subgame, as well as the value of the prize is allowed to be endogenous. Contrary to endogenous timing models with an exogenously fixed prize the present paper finds the following: (1) Players may decide to choose their effort simultaneously in the subgame perfect equilibrium (SPE) of the extended game. (2) The SPE does not need to be unique, in particular, there is no unique SPE with sequential moves if the direct costs of effort are zero. (3) Symmetry among players does not rule out incentives for precommitment to effort locally away from the Cournot–Nash level. (4) Finally, there may be no correlation between win probability and strategic incentives in our framework; a finding most central in the analysis of fixed-prize contests.

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Bibliographic Info

Article provided by Elsevier in its journal Games and Economic Behavior.

Volume (Year): 75 (2012)
Issue (Month): 1 ()
Pages: 168-184

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Handle: RePEc:eee:gamebe:v:75:y:2012:i:1:p:168-184

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Web page: http://www.elsevier.com/locate/inca/622836

Related research

Keywords: Contests; Endogenous prize; Endogenous timing; Cournot–Nash game; Stackelberg game;

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References

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Cited by:
  1. Baumann, Florian & Denter, Philipp & Friehe, Tim, 2013. "Hide or show? Endogenous observability of private precautions against crime when property value is private information," DICE Discussion Papers 115, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  2. Grégoire ROTA-GRAZIOSI & Clémence VERGNE & Blanca MORENO DODSON, 2012. "Breaking the wave of democracy: The effect of foreign aid on the incumbent’s re-election probability," Working Papers 201231, CERDI.
  3. Kicsiny, R. & Varga, Z. & Scarelli, A., 2014. "Backward induction algorithm for a class of closed-loop Stackelberg games," European Journal of Operational Research, Elsevier, vol. 237(3), pages 1021-1036.
  4. Hattori, Keisuke & Kitamura, Takahiro, 2011. "Endogenous Timing in Strategic Environmental Policymaking," MPRA Paper 29337, University Library of Munich, Germany.
  5. Magnus Hoffmann & Martin Kolmar, 2013. "Distributional Preferences in Probabilistic and Share Contests," CESifo Working Paper Series 4184, CESifo Group Munich.

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