IDEAS home Printed from https://ideas.repec.org/p/bsl/wpaper/2015-04.html
   My bibliography  Save this paper

A Tug of War Team Contest

Author

Listed:
  • Häfner, Samuel

    () (University of Basel)

Abstract

This paper analyzes a tug of war contest between two teams. In each round of the tug of war a pair of agents from the opposing teams competes in a private value all-pay auction with asymmetric type distributions and eort effectiveness. Whichever team arrives first at a given lead in terms of battle victories over the opponent wins the tug of war. There exists a unique Markov-perfect equilibrium in bidding strategies that depend on the player's valuation and on the history through the current state of the tug of war only. We derive rich comparative statics for this equilibrium by using the fact that the states of the tug of war evolve according to a time-homogeneous absorbing Markov chain.

Suggested Citation

  • Häfner, Samuel, 2015. "A Tug of War Team Contest," Working papers 2015/04, Faculty of Business and Economics - University of Basel.
  • Handle: RePEc:bsl:wpaper:2015/04
    as

    Download full text from publisher

    File URL: https://edoc.unibas.ch/61610/1/20180307172745_5aa0130111340.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Konrad, Kai A. & Kovenock, Dan, 2009. "Multi-battle contests," Games and Economic Behavior, Elsevier, vol. 66(1), pages 256-274, May.
    2. Richard Cornes & Roger Hartley, 2005. "Asymmetric contests with general technologies," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 26(4), pages 923-946, November.
    3. Konrad, Kai A., 2009. "Strategy and Dynamics in Contests," OUP Catalogue, Oxford University Press, number 9780199549603.
    4. Arye L. Hillman & John G. Riley, 1989. "Politically Contestable Rents And Transfers," Economics and Politics, Wiley Blackwell, vol. 1(1), pages 17-39, March.
    5. Drew Fudenberg & Jean Tirole, 1991. "Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061414, May.
    6. Kai A. Konrad, 2012. "Dynamic Contests and the Discouragement Effect," Revue d'économie politique, Dalloz, vol. 122(2), pages 233-256.
    7. Lien, Da-Hsiang Donald, 1990. "Corruption and allocation efficiency," Journal of Development Economics, Elsevier, vol. 33(1), pages 153-164, July.
    8. Christian Ewerhart, 2010. "Rent-seeking contests with independent private values," IEW - Working Papers 490, Institute for Empirical Research in Economics - University of Zurich.
    9. Seel, Christian, 2014. "The value of information in asymmetric all-pay auctions," Games and Economic Behavior, Elsevier, vol. 86(C), pages 330-338.
    10. Nti, Kofi O, 1997. "Comparative Statics of Contests and Rent-Seeking Games," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(1), pages 43-59, February.
    11. Dan Kovenock & Michael R. Baye & Casper G. de Vries, 1996. "The all-pay auction with complete information (*)," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 8(2), pages 291-305.
    12. Florian Morath & Johannes Münster, 2013. "Information acquisition in conflicts," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 54(1), pages 99-129, September.
    13. 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.
    14. Qiang Fu & Jingfeng Lu & Yue Pan, 2015. "Team Contests with Multiple Pairwise Battles," American Economic Review, American Economic Association, vol. 105(7), pages 2120-2140, July.
    15. Konrad, Kai A., 2002. "Investment in the absence of property rights; the role of incumbency advantages," European Economic Review, Elsevier, vol. 46(8), pages 1521-1537, September.
    16. E. Feess & Gerd Muehlheusser & M. Walzl, 2008. "Unfair contests," Journal of Economics, Springer, vol. 93(3), pages 267-291, April.
      • Feess Eberhard & Muehlheusser Gerd & Walzl Markus, 2004. "Unfair Contests," Research Memorandum 050, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    17. Amann, Erwin & Leininger, Wolfgang, 1996. "Asymmetric All-Pay Auctions with Incomplete Information: The Two-Player Case," Games and Economic Behavior, Elsevier, vol. 14(1), pages 1-18, May.
    18. Konrad, Kai Andreas & Kovenock, Daniel J., 2005. "Equilibrium and efficiency in the tug-of-war
      [Gleichgewicht und Effizienz im "Tug of War"]
      ," Discussion Papers, Research Unit: Market Processes and Governance SP II 2005-14, Social Science Research Center Berlin (WZB).
    19. Franke, Jörg & Kanzow, Christian & Leininger, Wolfgang & Schwartz, Alexandra, 2014. "Lottery versus all-pay auction contests: A revenue dominance theorem," Games and Economic Behavior, Elsevier, vol. 83(C), pages 116-126.
    20. Baik, Kyung Hwan, 1993. "Effort levels in contests : The public-good prize case," Economics Letters, Elsevier, vol. 41(4), pages 363-367.
    21. Warneryd, Karl, 1998. "Distributional conflict and jurisdictional organization," Journal of Public Economics, Elsevier, vol. 69(3), pages 435-450, September.
    22. Perez-Castrillo, J David & Verdier, Thierry, 1992. "A General Analysis of Rent-Seeking Games," Public Choice, Springer, vol. 73(3), pages 335-350, April.
    23. Gelder, Alan, 2014. "From Custer to Thermopylae: Last stand behavior in multi-stage contests," Games and Economic Behavior, Elsevier, vol. 87(C), pages 442-466.
    24. Gradstein, Mark & Konrad, Kai A, 1999. "Orchestrating Rent Seeking Contests," Economic Journal, Royal Economic Society, vol. 109(458), pages 536-545, October.
    25. repec:zbw:rwirep:0524 is not listed on IDEAS
    26. Amegashie, J Atsu, 1999. "The Design of Rent-Seeking Competitions: Committees, Preliminary and Final Contests," Public Choice, Springer, vol. 99(1-2), pages 63-76, April.
    27. Krishna, Vijay, 2009. "Auction Theory," Elsevier Monographs, Elsevier, edition 2, number 9780123745071.
    28. PARREIRAS, Sérgio O. & RUBINCHIK-PESSACH, Anna, 2006. "Contests with heterogeneous agents," CORE Discussion Papers 2006004, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    29. Christopher Harris & John Vickers, 1987. "Racing with Uncertainty," Review of Economic Studies, Oxford University Press, vol. 54(1), pages 1-21.
    30. Ron Siegel, 2009. "All-Pay Contests," Econometrica, Econometric Society, vol. 77(1), pages 71-92, January.
    31. Rosen, Sherwin, 1986. "Prizes and Incentives in Elimination Tournaments," American Economic Review, American Economic Association, vol. 76(4), pages 701-715, September.
    32. Parreiras, Sérgio O. & Rubinchik, Anna, 2010. "Contests with three or more heterogeneous agents," Games and Economic Behavior, Elsevier, vol. 68(2), pages 703-715, March.
    33. Stergios Skaperdas, 1996. "Contest success functions (*)," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 7(2), pages 283-290.
    34. Kirkegaard, René, 2012. "Favoritism in asymmetric contests: Head starts and handicaps," Games and Economic Behavior, Elsevier, vol. 76(1), pages 226-248.
    35. Franke, Jörg & Leininger, Wolfgang & Wasser, Cédric, 2014. "Revenue Maximizing Head Starts in Contests," Ruhr Economic Papers 524, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    36. Athey, Susan, 2001. "Single Crossing Properties and the Existence of Pure Strategy Equilibria in Games of Incomplete Information," Econometrica, Econometric Society, vol. 69(4), pages 861-889, July.
    37. Nitzan, Shmuel, 1991. "Collective Rent Dissipation," Economic Journal, Royal Economic Society, vol. 101(409), pages 1522-1534, November.
    38. Christopher Harris & John Vickers, 1985. "Perfect Equilibrium in a Model of a Race," Review of Economic Studies, Oxford University Press, vol. 52(2), pages 193-209.
    39. Kyung Hwan Baik, 2004. "Two-Player Asymmetric Contests with Ratio-Form Contest Success Functions," Economic Inquiry, Western Economic Association International, vol. 42(4), pages 679-689, October.
    40. Maskin, Eric & Tirole, Jean, 2001. "Markov Perfect Equilibrium: I. Observable Actions," Journal of Economic Theory, Elsevier, vol. 100(2), pages 191-219, October.
    41. Ron Siegel, 2014. "Asymmetric Contests with Head Starts and Nonmonotonic Costs," American Economic Journal: Microeconomics, American Economic Association, vol. 6(3), pages 59-105, August.
    42. Katz, Eliakim & Nitzan, Shmuel & Rosenberg, Jacob, 1990. "Rent-Seeking for Pure Public Goods," Public Choice, Springer, vol. 65(1), pages 49-60, April.
    43. Hurley, Terrance M. & Shogren, Jason F., 1998. "Asymmetric information contests," European Journal of Political Economy, Elsevier, vol. 14(4), pages 645-665, November.
    44. Clark, Derek J. & Riis, Christian, 2000. "Allocation efficiency in a competitive bribery game," Journal of Economic Behavior & Organization, Elsevier, vol. 42(1), pages 109-124, May.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Team Contests; Multi-Stage Contests; Tug of War; All-Pay Auction; Absorbing Markov Chain;

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bsl:wpaper:2015/04. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (WWZ). General contact details of provider: http://edirc.repec.org/data/wwzbsch.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.