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Hybrid All-Pay and Winner-Pay Contests

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  • Johan N. M. Lagerlöf

    (Department of Economics, University of Copenhagen)

Abstract

In many contests in economic and political life, both all-pay and winner-pay expenditures matter for winning. This paper studies such hybrid contests under symmetry and asymmetry. The symmetric model is very general but still yields a simple closed-form solution. More contestants tend to lead to substitution toward winner-pay investments, and total expenditures are always lower than in the corresponding all-pay contest. With a biased decision process and two contestants, the favored contestant wins with a higher likelihood, chooses less winner-pay investments, and contributes more to total expenditures. An endogenous bias that maximizes total expenditures disfavors the high-valuation contestant but still makes her the more likely one to win.

Suggested Citation

  • Johan N. M. Lagerlöf, 2017. "Hybrid All-Pay and Winner-Pay Contests," Discussion Papers 17-20, University of Copenhagen. Department of Economics.
    • Handle: RePEc:kud:kuiedp:1720
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    References listed on IDEAS

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    Cited by:

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    2. Altunina Anastasiia, 2022. "Study-Work Trade-off in Contests With Capacity-Constrained Students," HSE Working papers WP BRP 259/EC/2022, National Research University Higher School of Economics.

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    More about this item

    Keywords

    rent-seeking; lobbying; influence activities; multiple influence channels; producer theory;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • 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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