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Sorting in Iterated Incumbency Contests

Author

Listed:
  • Häfner, Samuel

    () (University of Basel)

  • Nöldeke, Georg

    () (University of Basel)

Abstract

This paper analyzes iterated incumbency contests with heterogeneous valuations in a large population setting. Incumbents repeatedly face dierent challengers, holding on to their positions until defeated in a contest. Defeated incumbents turn into challengers until they win a contest against an incumbent, thereby regaining an incumbency position. We consider steady-state equilibria of this process and study how and to which extend individuals sort into the incumbency positions depending on their valuations. In particular, we identify sucient conditions for positive sorting, meaning that the share of individuals with a given valuation holding an incumbency position is increasing in the valuation, and provide an example to show that negative rather than positive sorting may arise in equilibrium. Further results show how incumbency rents and sorting are aected by the frequency at which incumbency is contested and the scarcity of the incumbency positions.

Suggested Citation

  • Häfner, Samuel & Nöldeke, Georg, 2016. "Sorting in Iterated Incumbency Contests," Working papers 2016/02, Faculty of Business and Economics - University of Basel.
  • Handle: RePEc:bsl:wpaper:2016/02
    as

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    File URL: https://edoc.unibas.ch/61613/1/20180307173813_5aa01575a1d62.pdf
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    References listed on IDEAS

    as
    1. Lauermann, Stephan & Nöldeke, Georg, 2015. "Existence of steady-state equilibria in matching models with search frictions," Economics Letters, Elsevier, vol. 131(C), pages 1-4.
    2. Konrad, Kai A., 2009. "Strategy and Dynamics in Contests," OUP Catalogue, Oxford University Press, number 9780199549603.
    3. 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.
    4. repec:zbw:rwirep:0524 is not listed on IDEAS
    5. 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.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Contests; Sorting; Incumbency Rents; Steady-State Equilibrium;

    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
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

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