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Choosing fair lotteries to defeat the competition

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  • Liad Wagman

    ()

  • Vincent Conitzer

    ()

Abstract

We study the following game: each agent i chooses a lottery over nonnegative numbers whose expectation is equal to his budget b_i. The agent with the highest realized outcome wins and agents only care about winning). This game is motivated by various real-world settings where agents each choose a gamble and the primary goal is to come out ahead. Such settings include patent races, stock market competitions, and R&D tournaments. We show that there is a unique symmetric equilibrium when budgets are equal. We proceed to study and solve extensions, including settings where agents must obtain a minimum outcome to win; where agents choose their budgets (at a cost); and where budgets are private information.

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Bibliographic Info

Article provided by Springer in its journal International Journal of Game Theory.

Volume (Year): 41 (2012)
Issue (Month): 1 (February)
Pages: 91-129

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Handle: RePEc:spr:jogath:v:41:y:2012:i:1:p:91-129

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Related research

Keywords: Strategic gambling; Nash equilibrium; Fair lotteries; C70; C72; D81; L20;

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Cited by:
  1. Raphael Boleslavsky & Christopher Cotton, 2012. "Grade Inflation and Education Quality," Working Papers, University of Miami, Department of Economics 2012-2, University of Miami, Department of Economics.
  2. Raphael Boleslavsky & Christopher Cotton, 2011. "Learning more by doing less," Working Papers, University of Miami, Department of Economics 2012-1, University of Miami, Department of Economics.

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