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A Tug of War Team Contest

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  • 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
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    References listed on IDEAS

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    Cited by:

    1. Dong, Lu & Huang, Lingbo, 2019. "Is there no ‘I’ in team? Strategic effects in multi-battle team competition," Journal of Economic Psychology, Elsevier, vol. 75(PB).

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    More about this item

    Keywords

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

    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

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