Strategic Behavior in Contests

Avinash Dixit

American Economic Review, 1987, vol. 77, issue 5, 891-98

Abstract: This paper considers the effect of precommitment in contests where the rivals expend effort to win a prize. With two asymmetric players, it is found that the favorite will commit effort at a higher level than that in a Nash equilibrium without commitment, and the underdog at a lower level. With many players, the absence of an odds -on favorite among the rivals is sufficient to ensure overcommitment by any one player. Applications to sports, oligopoly, and rent seekin g are discussed. Copyright 1987 by American Economic Association.

Date: 1987
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