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Choosing Fair Lotteries to Defeat the Competition

  • Wagman, Liad
  • Conitzer, Vincent

We study the following game: each agent i chooses a lottery over nonnegative numbers whose expectation is equal to his budget b_i. The agent with the highest realized outcome wins and agents only care about winning). This game is motivated by various real-world settings where agents each choose a gamble and the primary goal is to come out ahead. Such settings include patent races, stock market competitions, and R&D tournaments. We show that there is a unique symmetric equilibrium when budgets are equal. We proceed to study and solve extensions, including settings where agents must obtain a minimum outcome to win; where agents choose their budgets (at a cost); and where budgets are private information.

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File URL: https://mpra.ub.uni-muenchen.de/10375/1/MPRA_paper_10375.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 10375.

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Date of creation: 14 Aug 2008
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Handle: RePEc:pra:mprapa:10375
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