Choosing Fair Lotteries to Defeat the Competition

Liad Wagman and Vincent Conitzer

MPRA Paper from University Library of Munich, Germany

Abstract: We study the following game: each agent i chooses a lottery over nonnegative numbers whose expectation is equal to his budget b_i. The agent with the highest realized outcome wins and agents only care about winning). This game is motivated by various real-world settings where agents each choose a gamble and the primary goal is to come out ahead. Such settings include patent races, stock market competitions, and R&D tournaments. We show that there is a unique symmetric equilibrium when budgets are equal. We proceed to study and solve extensions, including settings where agents must obtain a minimum outcome to win; where agents choose their budgets (at a cost); and where budgets are private information.

Keywords: Strategic gambling; Nash equilibrium; fair lotteries (search for similar items in EconPapers)
JEL-codes: C70 C72 D81 L20 (search for similar items in EconPapers)
Date: 2008-08-14
New Economics Papers: this item is included in nep-cta, nep-gth and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Choosing fair lotteries to defeat the competition (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:10375

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