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Asymmetric contests with initial probabilities of winning

Kyung Hwan Baik and Hanjoon Jung ()

International Journal of Economic Theory, 2019, vol. 15, issue 4, 385-398

Abstract: We study contests in which each player has an initial probability of winning the prize. First, we consider a model in which the impact parameter is exogenous. We find that neither the number of active players nor their identities nor the effort levels depend on the initial probabilities of winning. We find also that the possibility that the winner is determined by the initial probabilities of winning reduces prize dissipation, and tends to make most players better off, compared to the contest without this possibility. Then, considering a model in which the impact parameter is endogenous, we find that every player may expend zero effort.

Date: 2019
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https://doi.org/10.1111/ijet.12173

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International Journal of Economic Theory is currently edited by Kazuo Nishimura and Makoto Yano

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