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Weakest-link contests with group-specific public good prizes

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  • Lee, Dongryul
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    Abstract

    We examine the equilibrium effort levels of individual players and groups in contests in which n group compete to win a group-specific public good prize, individual players choose their effort levels simultaneously and independently, and each group's probability of winning the prize follows a weakest-link rule or weakest-link contest success function. In our basic model, we show that the lowest-valuation players in each group play decisive roles in determining the Nash equilibria of the game. There are multiple pure-strategy Nash equilibria in the game but there is a unique coalition-proof Nash equilibrium at which neither any player nor any group does not have an incentive to coordinate and deviate from the equilibrium. No free riding problem exists in equilibrium. As an example of our basic model, we consider a simple contest where two groups with two players compete against, and find that the high-valuation players in each group have incentives to subsidize the low-valuation players in their group. Finally, we examine the equilibrium subsidy rates of the groups in a contest where first the high-valuation players in each group decide how much to subsidize low-valuation players in their group and then the individual players in the contest choose their effort levels simultaneously and independently.

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    Bibliographic Info

    Article provided by Elsevier in its journal European Journal of Political Economy.

    Volume (Year): 28 (2012)
    Issue (Month): 2 ()
    Pages: 238-248

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    Handle: RePEc:eee:poleco:v:28:y:2012:i:2:p:238-248

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    Web page: http://www.elsevier.com/locate/inca/505544

    Related research

    Keywords: Weakest-link technology; Contest; Group-specific public goods;

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    Cited by:
    1. Chowdhury, Subhasish & Lee, Dongryul & Sheremeta, Roman, 2013. "Top Guns May Not Fire: Best-Shot Group Contests with Group-Specific Public Good Prizes," MPRA Paper 46654, University Library of Munich, Germany.
    2. Jay Pil Choi & Subhasish M. Chowdhury & Jaesoo Kim, 2011. "Group Contests with Internal Conflict and Power Asymmetry," University of East Anglia Applied and Financial Economics Working Paper Series 025, School of Economics, University of East Anglia, Norwich, UK..
    3. Fabio Sferra & Massimo Tavoni, 2013. "Endogenous Participation in a Partial Climate Agreement with Open Entry: A Numerical Assessment," Working Papers 2013.60, Fondazione Eni Enrico Mattei.
    4. Subhasish M. Chowdhury & Iryna Topolyan, 2013. "The Attack-and-Defence Group Contests," University of East Anglia Applied and Financial Economics Working Paper Series 049, School of Economics, University of East Anglia, Norwich, UK..
    5. Philip Brookins & John Lightle & Dmitry Ryvkin, 2014. "An experimental study of sorting in group contests," Working Papers wp2014_01_01, Department of Economics, Florida State University.
    6. Kolmar, Martin & Rommeswinkel, Hendrik, 2013. "Contests with group-specific public goods and complementarities in efforts," Journal of Economic Behavior & Organization, Elsevier, vol. 89(C), pages 9-22.
    7. Cason, Timothy N. & Sheremeta, Roman M. & Zhang, Jingjing, 2012. "Communication and efficiency in competitive coordination games," Games and Economic Behavior, Elsevier, vol. 76(1), pages 26-43.
    8. Subhasish M. Chowdhury & Dongryul Lee & Iryna Topolyan, 2013. "The Max-Min Group Contest," University of East Anglia Applied and Financial Economics Working Paper Series 050, School of Economics, University of East Anglia, Norwich, UK..
    9. María Cubel & Santiago Sanchez-Pages, 2014. "Difference-form group contests," Working Papers 2014/6, Institut d'Economia de Barcelona (IEB).
    10. Van Long, Ngo, 2013. "The theory of contests: A unified model and review of the literature," European Journal of Political Economy, Elsevier, vol. 32(C), pages 161-181.

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