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Choosing Fair Lotteries to Defeat the Competition

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  • Wagman, Liad
  • Conitzer, Vincent

Abstract

We study the following game: each agent i chooses a lottery over nonnegative numbers whose expectation is equal to his budget b_i. The agent with the highest realized outcome wins and agents only care about winning). This game is motivated by various real-world settings where agents each choose a gamble and the primary goal is to come out ahead. Such settings include patent races, stock market competitions, and R&D tournaments. We show that there is a unique symmetric equilibrium when budgets are equal. We proceed to study and solve extensions, including settings where agents must obtain a minimum outcome to win; where agents choose their budgets (at a cost); and where budgets are private information.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 10375.

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Date of creation: 14 Aug 2008
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Handle: RePEc:pra:mprapa:10375

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Keywords: Strategic gambling; Nash equilibrium; fair lotteries;

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  1. Richard Gilbert and Carl Shapiro., 1989. "Optimal Patent Length and Breadth," Economics Working Papers 89-102, University of California at Berkeley.
  2. Nancy Gallini & Suzanne Scotchmer, 2002. "Intellectual Property: When Is It the Best Incentive System?," NBER Chapters, in: Innovation Policy and the Economy, Volume 2, pages 51-78 National Bureau of Economic Research, Inc.
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Cited by:
  1. Raphael Boleslavsky & Christopher Cotton, 2012. "Grade Inflation and Education Quality," Working Papers 2012-2, University of Miami, Department of Economics.
  2. Raphael Boleslavsky & Christopher Cotton, 2011. "Learning more by doing less," Working Papers 2012-1, University of Miami, Department of Economics.

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