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Contests between groups of unknown size

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  • Boosey, Luke
  • Brookins, Philip
  • Ryvkin, Dmitry

Abstract

We study group contests where group sizes are stochastic and unobservable to participants at the time of investment. When the joint distribution of group sizes is symmetric, with expected group size k¯, the symmetric equilibrium aggregate investment is lower than in a symmetric group contest with commonly known fixed group size k¯. A similar result holds for two groups with asymmetric distributions of sizes. For the symmetric case, the reduction in individual and aggregate investment due to group size uncertainty increases with the variance in relative group impacts. When group sizes are independent conditional on a common shock, a stochastic increase in the common shock mitigates the effect of group size uncertainty unless the common and idiosyncratic components of group size are strong complements. Finally, group size uncertainty undermines the robustness of the group size paradox otherwise present in the model.

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  • Boosey, Luke & Brookins, Philip & Ryvkin, Dmitry, 2019. "Contests between groups of unknown size," Games and Economic Behavior, Elsevier, vol. 113(C), pages 756-769.
  • Handle: RePEc:eee:gamebe:v:113:y:2019:i:c:p:756-769
    DOI: 10.1016/j.geb.2018.09.001
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    Cited by:

    1. Luke Boosey & Philip Brookins & Dmitry Ryvkin, 2020. "Entry in group contests," Working Papers wp2020_02_01, Department of Economics, Florida State University.
    2. Mikhail Drugov & Dmitry Ryvkin, 2019. "The shape of luck and competition in tournaments," Working Papers w0251, New Economic School (NES).
    3. Ryvkin, Dmitry & Drugov, Mikhail, 0. "The shape of luck and competition in winner-take-all tournaments," Theoretical Economics, Econometric Society.
    4. Arye Hillman & Ngo Van Long, 2017. "The social cost of contestable benefits," CIRANO Working Papers 2017s-11, CIRANO.
    5. Arye L. Hillman & Ngo Van Long, 2017. "Rent Seeking: The Social Cost of Contestable Benefits," CESifo Working Paper Series 6462, CESifo.
    6. Luke Boosey & Philip Brookins & Dmitry Ryvkin, 2020. "Information Disclosure in Contests with Endogenous Entry: An Experiment," Management Science, INFORMS, vol. 66(11), pages 5128-5150, November.

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    More about this item

    Keywords

    Group contest; Stochastic group size; Population uncertainty; Relative group impact; Group size paradox;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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