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Comparative Statics and Welfare in Heterogeneous Contests: Bribes, Caps, and Performance Thresholds

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Author Info
René Kirkegaard () (Department of Economics, Brock University)

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Abstract

Comparative statics for contests with two privately informed and ex ante heterogeneous contestants are analyzed. Strategies and payoffs are examined and it is shown that total effort may increase when one contestant becomes weaker. The second part of the paper considers dynamic contests in which one bidder may endogenously be revealed to be weak. For example, the first contestant has the possibility of preempting the contest by paying a bribe or taking some other action. If the bribe is not paid the second contestant infers the first contestant is relatively weak or uninterested. Adding the possibility of paying a preemptive bribe decreases expected payoff for a set of types of at least one of the contestants, possibly the contestant who is ostensibly advantaged by the option to preempt the contest. However, the payoff of the recipient of the effort and the ex ante payoff of both contestants may improve.

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File URL: ftp://coffee.econ.brocku.ca/RePec/pdf/0702.pdf
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Publisher Info
Paper provided by Brock University, Department of Economics in its series Working Papers with number 0702.

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Length: 32 pages
Date of creation: Aug 2007
Date of revision:
Handle: RePEc:brk:wpaper:0702

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Related research
Keywords: Contests; All-Pay Auctions; Bribery; Caps;

Find related papers by JEL classification:
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Lien, Da-Hsiang Donald, 1990. "Corruption and allocation efficiency," Journal of Development Economics, Elsevier, vol. 33(1), pages 153-164, July. [Downloadable!] (restricted)
  2. Todd R. Kaplan & David Wettstein, 2006. "Caps on Political Lobbying: Comment," American Economic Review, American Economic Association, vol. 96(4), pages 1351-1354, September. [Downloadable!]
  3. Amann, Erwin & Leininger, Wolfgang, 1996. "Asymmetric All-Pay Auctions with Incomplete Information: The Two-Player Case," Games and Economic Behavior, Elsevier, vol. 14(1), pages 1-18, May. [Downloadable!] (restricted)
  4. Nicolas Sahuguet, 2006. "Caps in asymmetric all-pay auctions with incomplete information," Economics Bulletin, Economics Bulletin, vol. 3(9), pages 1-8. [Downloadable!]
  5. Chan, William, 1996. "External Recruitment versus Internal Promotion," Journal of Labor Economics, University of Chicago Press, vol. 14(4), pages 555-70, October. [Downloadable!] (restricted)
  6. Lebrun, Bernard, 1998. "Comparative Statics in First Price Auctions," Games and Economic Behavior, Elsevier, vol. 25(1), pages 97-110, October. [Downloadable!] (restricted)
  7. Arieh Gavious & Benny Moldovanu & Aner Sela, 2002. "Bid Costs and Endogenous Bid Caps," RAND Journal of Economics, The RAND Corporation, vol. 33(4), pages 709-722, Winter.
    Other versions:
  8. Kong-Pin Chen, 2005. "External Recruitment as an Incentive Device," Journal of Labor Economics, University of Chicago Press, vol. 23(2), pages 259-278, April. [Downloadable!]
    Other versions:
  9. PARREIRAS, SŽrgio O. & RUBINCHIK-PESSACH, Anna, 2006. "Contests with heterogeneous agents," CORE Discussion Papers 2006004, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE). [Downloadable!]
  10. Che, Yeon-Koo & Gale, Ian L, 1998. "Caps on Political Lobbying," American Economic Review, American Economic Association, vol. 88(3), pages 643-51, June. [Downloadable!] (restricted)
    Other versions:
  11. Che, Yeon-Koo & Gale, Ian, 2006. "Caps on Political Lobbying: Reply," MPRA Paper 6097, University Library of Munich, Germany. [Downloadable!]
    Other versions:
  12. Kirkegaard, René & Per Baltzer Overgaard, 2005. "Pre-Auction Offers in Asymmetric First-Price and Second-Price Auctions," Economics Working Papers 2005-17, School of Economics and Management, University of Aarhus. [Downloadable!]
    Other versions:
  13. Clark, Derek J. & Riis, Christian, 2000. "Allocation efficiency in a competitive bribery game," Journal of Economic Behavior & Organization, Elsevier, vol. 42(1), pages 109-124, May. [Downloadable!] (restricted)
  14. Roberto Burguet & Martin K. Perry, 2007. "Bribery and Favoritism by Auctioneers in Sealed-Bid Auctions," The B.E. Journal of Theoretical Economics, Berkeley Electronic Press, vol. 7(1). [Downloadable!]
  15. Ed Hopkins & Tatiana Kornienko, 2007. "Cross and Double Cross: Comparative Statics in First Price and All Pay Auctions," The B.E. Journal of Theoretical Economics, Berkeley Electronic Press, vol. 7(1). [Downloadable!]
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