Contests with rank-order spillovers

Michael Baye, Dan Kovenock and Casper de Vries

Economic Theory, 2012, vol. 51, issue 2, 315-350

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 litigation, and a host of other contests. Copyright The Author(s) 2012

Keywords: Contests; Auctions; Spillovers; C72; C73; D43; D44; D74 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (48)

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Working Paper: Contests with Rank-Order Spillovers (2008)
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DOI: 10.1007/s00199-009-0489-2

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