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Contests with Rank-Order Spillovers

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Author Info

  • Michael R. Baye

    (Department of Business Economics and Public Policy, Indiana University Kelley School of Business)

  • Dan Kovenock

    (University of Iowa)

  • Casper G. de Vries

    (Tinbergen Institute and Erasmus University Rotterdam)

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.

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File URL: http://www.bus.indiana.edu/riharbau/RePEc/iuk/wpaper/bepp2008-20-baye-kovenock-devries.pdf
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Bibliographic Info

Paper provided by Indiana University, Kelley School of Business, Department of Business Economics and Public Policy in its series Working Papers with number 2008-20.

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Date of creation: Nov 2008
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Handle: RePEc:iuk:wpaper:2008-20

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References

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Citations

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Cited by:
  1. Sela, Aner, 2009. "Best-of-Three All-Pay Auctions," CEPR Discussion Papers 7224, C.E.P.R. Discussion Papers.
  2. Sheremeta, Roman & Chowdhury, Subhasish, 2010. "A generalized Tullock contest," MPRA Paper 52102, University Library of Munich, Germany.
  3. Roman M. Sheremeta & Subhasish M. Chowdhury, 2014. "Strategically Equivalent Contests," Working Papers 14-06, Chapman University, Economic Science Institute.
  4. Michael R. Baye & Dan Kovenock J. & Casper De Vries, 2010. "The Herodotus Paradox," CESifo Working Paper Series 3135, CESifo Group Munich.
  5. Stefan Jönsson & Armin Schmutzler, 2013. "All-pay auctions: Implementation and optimality," ECON - Working Papers 108, Department of Economics - University of Zurich.
  6. 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).
  7. Segev, Ella & Sela, Aner, 2014. "Sequential all-pay auctions with noisy outputs," Journal of Mathematical Economics, Elsevier, vol. 50(C), pages 251-261.
  8. Rabia Nessah, 2013. "Weakly Continuous Security in Discontinuous and Nonquasiconcave Games: Existence and Characterization," Working Papers 2013-ECO-20, IESEG School of Management.
  9. 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..
  10. Lu, Jingfeng, 2012. "Optimal auctions with asymmetric financial externalities," Games and Economic Behavior, Elsevier, vol. 74(2), pages 561-575.
  11. Gregor, Martin, 2012. "Contest for power in organizations," Economics Letters, Elsevier, vol. 114(3), pages 280-283.
  12. 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.

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