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Hybrid All-Pay and Winner-Pay Contests

Johan Lagerlof ()

No 17-20, Discussion Papers from University of Copenhagen. Department of Economics

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 is very general but still 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.

Keywords: rent-seeking; lobbying; influence activities; multiple influence channels; producer theory (search for similar items in EconPapers)
JEL-codes: C72 D24 D72 D74 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-gth and nep-mic
Date: 2017-09-26
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