Hybrid All-Pay and Winner-Pay Contests

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  • mic.20180107

    Forlagets udgivne version, 741 KB, PDF-dokument

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 assumes very little structure but 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.

OriginalsprogEngelsk
TidsskriftAmerican Economic Journal: Microeconomics
Vol/bind12
Udgave nummer4
Sider (fra-til)144-169
Antal sider26
ISSN1945-7669
DOI
StatusUdgivet - nov. 2020

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