Contests with Rank-Order Spillovers

Michael R. Baye, Dan Kovenock () and Casper G. de Vries ()

No 09-066/2, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: This paper presents a unified framework for characterizing symmetric equilibrium in simultaneous move, two-player, rank-order contests with complete information, in which each player's strategy generates direct or indirect affine "spillover" effects that depend on the rank-order of her decision variable. These effects arise in natural interpretations of a number of important economic environments, as well as in classic contests adapted to recent experimental and behavioral models where individuals exhibit inequality aversion or regret. We provide the closed-form solution for the symmetric Nash equilibria of this class of games, and show how it can be used to directly solve for equilibrium behavior in auctions, pricing games, tournaments, R&D races, models of ligitation, and a host of other contests.

Keywords: Contests; Auctions; Spillovers (search for similar items in EconPapers)
JEL-codes: C72 C73 D43 D44 D74 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-gth
Date: 2009-07-28

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http://www.tinbergen.nl/discussionpapers/09066.pdf (application/pdf)

Related works:
Working Paper: Contests with Rank-Order Spillovers (2008)
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Persistent link: http://EconPapers.repec.org/RePEc:dgr:uvatin:20090066

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