The Lifeboat Problem

Kai Konrad and Dan Kovenock

Working Papers from Max Planck Institute for Tax Law and Public Finance

Abstract: We study an all-pay contest with multiple identical prizes ("lifeboat seats"). Prizes are partitioned into subsets of prizes ("lifeboats"). Players play a two-stage game. First, each player chooses an element of the partition ("a lifeboat"). Then each player competes for a prize in the subset chosen ("a seat"). We characterize and compare the subgame perfect equilibria in which all players employ pure strategies or all players play identical mixed strategies in the first stage. We find that the partitioning of prizes allows for coordination failure among players when they play nondegenerate mixed strategies and this can shelter rents and reduce rent dissipation compared to some of the less efficient pure strategy equilibria.

Keywords: all-pay contest; multiple prizes; rent dissipation; lifeboat (search for similar items in EconPapers)
JEL-codes: D72 D74 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2011-09
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http://www.tax.mpg.de/RePEc/mpi/wpaper/Tax-MPG-RPS-2011-13.pdf Full text (original version) (application/pdf)

Related works:
Journal Article: The lifeboat problem (2012)
Working Paper: The lifeboat problem (2012)
Working Paper: The Lifeboat Problem (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:mpi:wpaper:the_lifeboat_problem

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