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A Max-Min Two-Group Contest with Binary Actions and Incomplete Information à la Global Games

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Listed:
  • Davide Bosco
  • Mario Gilli
  • Andrea Sorrentino

Abstract

The main novelty of this paper is the introduction of incomplete information à la global games into max-min group contests with binary actions. Depending on whether the complete information assumption is relaxed on the value of the prize or on the cost of providing effort, we obtain different results in terms of equilibrium selection: in the first case, there exist both an equilibrium in (monotonic) switching strategies and an equilibrium robust to incomplete information in the sense of Kajii and Morris [1997], in which no player exerts effort in both groups, whereas in the second one there exists a unique equilibrium in (monotonic) switching-strategies. Then, we discuss the presence of the group-size paradox for both classes of games. The results are thus extended to the case of M groups, and the properties of Bayes-Nash equilibria for these classes of games are investigated. Finally, we show a limit-uniqueness and a noise independent selection result.

Suggested Citation

  • Davide Bosco & Mario Gilli & Andrea Sorrentino, 2024. "A Max-Min Two-Group Contest with Binary Actions and Incomplete Information à la Global Games," Working Papers 545, University of Milano-Bicocca, Department of Economics, revised Mar 2025.
    • Handle: RePEc:mib:wpaper:545
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    References listed on IDEAS

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    1. Subhasish M. Chowdhury & Dongryul Lee & Iryna Topolyan, 2016. "The Max-Min Group Contest: Weakest-link (Group) All-Pay Auction," Southern Economic Journal, Southern Economic Association, vol. 83(1), pages 105-125, July.
    2. Carlsson, H. & van Damme, E.E.C., 1991. "Equilibrium selection in stag hunt games," Discussion Paper 1991-70, Tilburg University, Center for Economic Research.
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    Keywords

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    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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