In many real-world contests, players can influence their chances of winning through two or more activities or "arms". In this paper, we analyze the equilibrium properties of a two-player two-armed contest, and compare them to those of a standard two-player one-armed contest. Several interesting results arise. For example, in the case of symmetric players, we find that rent dissipation doubles when the second arm is introduced. In general, if neither player is more than twice as efficient as the other with the second arm, more rent is dissipated in the two-armed contest than in the one-armed contest. We also derive conditions under which total effort with the first arm decreases when the second arm is allowed into play, and under which both players would agree not to use their second arm.
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Paper provided by Department of Economics, Emory University (Atlanta) in its series Emory Economics with number
0527.
Cited by: (explanations, 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.)
Johannes Münster, 2006.
"Contests with Investment,"
Discussion Papers
120, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
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