Hybrid All-Pay and Winner-Pay Contests

Johan Lagerlof

American Economic Journal: Microeconomics, 2020, vol. 12, issue 4, 144-69

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 assumes very little structure but 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.

JEL-codes: C72 D72 D82 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (2)

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Working Paper: Hybrid All-Pay and Winner-Pay Contests (2017)
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DOI: 10.1257/mic.20180107

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