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Contests with rank-order spillovers

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Author Info

  • Michael Baye

    ()

  • Dan Kovenock

    ()

  • Casper Vries

    ()

Abstract

This paper presents a unified framework for characterizing symmetric equilibrium in simultaneous move, two-player, rank-order contests with complete information, in which each player’s strategy generates direct or indirect affine “spillover” effects that depend on the rank-order of her decision variable. These effects arise in natural interpretations of a number of important economic environments, as well as in classic contests adapted to recent experimental and behavioral models where individuals exhibit inequality aversion or regret. We provide the closed-form solution for the symmetric Nash equilibria of this class of games, and show how it can be used to directly solve for equilibrium behavior in auctions, pricing games, tournaments, R&D races, models of litigation, and a host of other contests. Copyright The Author(s) 2012

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File URL: http://hdl.handle.net/10.1007/s00199-009-0489-2
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Bibliographic Info

Article provided by Springer in its journal Economic Theory.

Volume (Year): 51 (2012)
Issue (Month): 2 (October)
Pages: 315-350

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Handle: RePEc:spr:joecth:v:51:y:2012:i:2:p:315-350

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Related research

Keywords: Contests; Auctions; Spillovers; C72; C73; D43; D44; D74;

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References

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Citations

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Cited by:
  1. Sheremeta, Roman & Chowdhury, Subhasish, 2010. "A generalized Tullock contest," MPRA Paper 52102, University Library of Munich, Germany.
  2. Fehr, Dietmar & Schmid, Julia, 2010. "Exclusion in the all-pay auction: An experimental investigation," Discussion Papers, Research Unit: Market Behavior SP II 2010-04, Social Science Research Center Berlin (WZB).
  3. Chowdhury, Subhasish & Sheremeta, Roman, 2014. "Strategically Equivalent Contests," MPRA Paper 55450, University Library of Munich, Germany.
  4. Jönsson, Stefan & Schmutzler, Armin, 2013. "All-Pay Auctions: Implementation and Optimality," CEPR Discussion Papers 9323, C.E.P.R. Discussion Papers.
  5. Subhashish Modak Chowdhury & Roman M. Sheremeta, 2009. "A generalized Tullock contest and the existence of multiple equilibria," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 09-08, School of Economics, University of East Anglia, Norwich, UK..
  6. Segev, Ella & Sela, Aner, 2014. "Sequential all-pay auctions with noisy outputs," Journal of Mathematical Economics, Elsevier, vol. 50(C), pages 251-261.
  7. Michael R. Baye & Dan Kovenock & Casper G. de Vries, 2010. "The Herodotus Paradox," Tinbergen Institute Discussion Papers 10-090/2, Tinbergen Institute.
  8. Ella Segev & Aner Sela, 2011. "Sequential All-Pay Auctions with Head Starts and Noisy Outputs," Working Papers 1106, Ben-Gurion University of the Negev, Department of Economics.
  9. Gregor, Martin, 2012. "Contest for power in organizations," Economics Letters, Elsevier, vol. 114(3), pages 280-283.
  10. Lu, Jingfeng, 2012. "Optimal auctions with asymmetric financial externalities," Games and Economic Behavior, Elsevier, vol. 74(2), pages 561-575.
  11. Sela, Aner, 2009. "Best-of-Three All-Pay Auctions," CEPR Discussion Papers 7224, C.E.P.R. Discussion Papers.
  12. Rabia Nessah, 2013. "Weakly Continuous Security in Discontinuous and Nonquasiconcave Games: Existence and Characterization," Working Papers 2013-ECO-20, IESEG School of Management.

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