A tug-of-war team contest

Samuel Hafner

Games and Economic Behavior, 2017, vol. 104, issue C, 372-391

Abstract: This paper analyzes a tug-of-war contest between two teams. In each round of the tug-of-war, a pair of agents from the opposing teams competes in a private value all-pay auction with asymmetric value distributions and effort effectiveness. Whichever team arrives first at a given lead in terms of battle victories over the opponent wins the tug-of-war. There exists a unique Markov-perfect equilibrium in bidding strategies which depend on the respective player's valuation and the current state of the tug-of-war. We derive rich comparative statics for this equilibrium by using the fact that the state of the tug-of-war evolves according to a time-homogeneous absorbing Markov chain.

Keywords: Team contests; Multi-stage contests; Tug-of-war; All-pay auction; Absorbing Markov chain (search for similar items in EconPapers)
JEL-codes: D74 F51 H56 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: A Tug of War Team Contest (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:104:y:2017:i:c:p:372-391

DOI: 10.1016/j.geb.2017.04.013

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