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It's not always best to be first

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  • Sela, Aner

Abstract

We study a model with n agents, each of whom has both a linear reward function that increases in the agent's effort and an effort constraint. However, since the effort (output) of the players has a negative effect on society the designer imposes a punishment such that the agent with the highest effort who caused the greatest damage is punished. We analyze the equilibrium of this model with either symmetric or asymmetric agents. At all the equilibrium points, all the agents are active and all have positive expected payoffs. We characterize the properties of the agents' equilibrium strategies and compare them to the well-known equilibrium strategies of the all-pay auction in which the agent with the highest effort wins a prize.

Suggested Citation

  • Sela, Aner, 2018. "It's not always best to be first," CEPR Discussion Papers 12887, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:12887
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    References listed on IDEAS

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    1. Benny Moldovanu & Aner Sela, 2001. "The Optimal Allocation of Prizes in Contests," American Economic Review, American Economic Association, vol. 91(3), pages 542-558, June.
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    7. Aner Sela, 2012. "Sequential two-prize contests," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 51(2), pages 383-395, October.
    8. Konrad, Kai A. & Kovenock, Dan, 2009. "Multi-battle contests," Games and Economic Behavior, Elsevier, vol. 66(1), pages 256-274, May.
    9. Benny Moldovanu & Aner Sela & Xianwen Shi, 2012. "Carrots And Sticks: Prizes And Punishments In Contests," Economic Inquiry, Western Economic Association International, vol. 50(2), pages 453-462, April.
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    Keywords

    Contests; Winner's curse;

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