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Multi-battle contests

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Author Info
Konrad, Kai A.
Kovenock, Dan

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Abstract

We study equilibrium in a multistage race in which players compete in a sequence of simultaneous move component contests. Players may win a prize for winning each component contest, as well as a prize for winning the overall race. Each component contest is an all-pay auction with complete information. We characterize the unique equilibrium analytically and demonstrate that it exhibits endogenous uncertainty. Even a large lead by one player does not fully discourage the other player, and each feasible state is reached with positive probability in equilibrium (pervasiveness). Total effort may exceed the value of the prize by a factor that is proportional to the maximum number of stages. Important applications are to war, sports, and R&D contests and the results have empirical counterparts there.

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Paper provided by Purdue University, Department of Economics in its series Purdue University Economics Working Papers with number 1187.

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Length: 33 pages
Date of creation: Mar 2006
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Handle: RePEc:pur:prukra:1187

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Related research
Keywords: all-pay auction contest race conflict multi-stage R&D endogenous uncertainty preemption discouragement

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Find related papers by JEL classification:
D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior
D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances

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References listed on IDEAS
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.:
  1. Fudenberg, Drew & Gilbert, Richard & Stiglitz, Joseph & Tirole, Jean, 1983. "Preemption, leapfrogging and competition in patent races," European Economic Review, Elsevier, vol. 22(1), pages 3-31, June. [Downloadable!] (restricted)
  2. Kai A. Konrad & Dan Kovenock, 2005. "Equilibrium and Efficiency in the Tug-of-War," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
    Other versions:
  3. Klumpp, Tilman & Polborn, Mattias K., 2006. "Primaries and the New Hampshire Effect," Journal of Public Economics, Elsevier, vol. 90(6-7), pages 1073-1114, August. [Downloadable!] (restricted)
  4. Baye, M.R. & Kovenock, D. & De Vries, C., 1992. "The All-Pay Auction with Complete Information," Papers 8-92-1, Pennsylvania State - Department of Economics.
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  5. Budd, Christopher & Harris, Christopher & Vickers, John, 1993. "A Model of the Evolution of Duopoly: Does the Asymmetry between Firms Tend to Increase or Decrease?," Review of Economic Studies, Blackwell Publishing, vol. 60(3), pages 543-73, July. [Downloadable!] (restricted)
  6. Stefan Szymanski, 2003. "The Economic Design of Sporting Contests," Journal of Economic Literature, American Economic Association, vol. 41(4), pages 1137-1187, December.
  7. Garfinkel, M.R. & Skaperdas, S., 2000. "Conflict without Misperceptions or Incomplete Information: how the Future Matters," Papers 99-00-11, California Irvine - School of Social Sciences.
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  8. Baye, Michael R & Kovenock, Dan & de Vries, Casper G, 1999. " The Incidence of Overdissipation in Rent-Seeking Contests," Public Choice, Springer, vol. 99(3-4), pages 439-54, June. [Downloadable!] (restricted)
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  9. Harris, Christopher & Vickers, John, 1987. "Racing with Uncertainty," Review of Economic Studies, Blackwell Publishing, vol. 54(1), pages 1-21, January. [Downloadable!] (restricted)
  10. Arye L. Hillman & John G. Riley, 1987. "Politically Contestable Rents and Transfers," UCLA Economics Working Papers 452, UCLA Department of Economics. [Downloadable!]
  11. Baye, M.R. & Kovenock, D. & De Vries, C.G., 1992. "Rigging the Lobbying Process: An Application of the All- Pay Auction," Papers 9-92-2, Pennsylvania State - Department of Economics.
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  12. Thomas Hoehn & Stefan Szymanski, 1999. "The Americanization of European football," Economic Policy, CEPR, CES, MSH, vol. 14(28), pages 203-240, 04. [Downloadable!] (restricted)
  13. Harris, Christopher & Vickers, John, 1985. "Perfect Equilibrium in a Model of a Race," Review of Economic Studies, Blackwell Publishing, vol. 52(2), pages 193-209, April. [Downloadable!] (restricted)
  14. Fearon, James D, 1995. "Rationalist Explanations for War," International Organization, MIT Press, vol. 49(3), pages 379-414, Summer.
  15. Dan Kovenock & Michael R. Baye & Casper G. de Vries, 1996. "The all-pay auction with complete information (*)," Economic Theory, Springer, vol. 8(2), pages 291-305.
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  1. Konrad, Kai A & Kovenock, Dan, 2006. "Multi-Stage Contests with Stochastic Ability," CEPR Discussion Papers 5844, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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