Distribution-Free Equilibrium in Search Contests

Emre Ozdenoren and Murat Erkurt

No 21470, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We study contests in which N players sequentially draw from a distribution at a fixed cost per draw, and the highest accepted value wins a prize. We analyze three search conventions: unlimited draws with or without recall, finitely many draws with recall, and two draws without recall. In each case the unique symmetric equilibrium is in stationary threshold strategies, and the equilibrium acceptance quantile depends only on the number of players, the search depth, and the cost-prize ratio, not on the underlying distribution. With unlimited draws, total search expenditure equals the prize (full rent dissipation) and adding competitors lowers the threshold (discouragement). With finitely many draws, the threshold rises in N at low costs (selectivity) and falls at high costs. Shifting the value distribution leaves the efficient prize unchanged, while thickening the upper tail at fixed mean strictly raises it. A planner who also chooses the field size prefers N=2 with unlimited draws, but heavy tails favor larger fields when search depth is bounded.

Keywords: Contests (search for similar items in EconPapers)
Date: 2026-05
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