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Your failure is my opportunity—Effects of elimination in contests

Author

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  • Mendel, Moritz
  • Pieroth, Ferdinand
  • Seel, Christian

Abstract

In this paper, we consider a sequence of multi-prize all-pay auctions, where low-performing players are eliminated along the way. We provide sufficient conditions such that equilibrium behavior is unaffected by the prospects of winning prizes in later rounds. When these conditions are not met, we identify a novel externality effect and derive equilibria in a model with two rounds. We compare our results to knockout tournaments in which players are partitioned into subcontests in each round.

Suggested Citation

  • Mendel, Moritz & Pieroth, Ferdinand & Seel, Christian, 2021. "Your failure is my opportunity—Effects of elimination in contests," Journal of Mathematical Economics, Elsevier, vol. 95(C).
    • Handle: RePEc:eee:mateco:v:95:y:2021:i:c:s0304406821000331
    DOI: 10.1016/j.jmateco.2021.102495
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    More about this item

    Keywords

    Elimination contest; Identity-dependent externality;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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