The lifeboat problem
AbstractWe study an all-pay contest with multiple identical prizes ("lifeboat seats"). Prizes are partitioned into subsets of prizes ("lifeboats"). Players play a twostage game. First, each player chooses an element of the partition ("a lifeboat"). Then each player competes for a prize in the subset chosen ("a seat"). We characterize and compare the subgame perfect equilibria in which all players employ pure strategies or all players play identical mixed strategies in the first stage. We find that the partitioning of prizes allows for coordination failure among players when they play nondegenerate mixed strategies and this can shelter rents and reduce rent dissipation compared to some of the less efficient pure strategy equilibria.
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Bibliographic InfoPaper provided by University of Munich, Department of Economics in its series Munich Reprints in Economics with number 13962.
Date of creation: 2012
Date of revision:
Publication status: Published in European Economic Review 14 108(2012): pp. 552-559
all-pay contest; multiple prizes; rent dissipation; lifeboat;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-04-06 (All new papers)
- NEP-GTH-2013-04-06 (Game Theory)
- NEP-HPE-2013-04-06 (History & Philosophy of Economics)
- NEP-MIC-2013-04-06 (Microeconomics)
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