American Economic Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
Asymmetric Contests with Head Starts and Nonmonotonic Costs
American Economic Journal: Microeconomics
vol. 6,
no. 3, August 2014
(pp. 59–105)
Abstract
This paper studies equilibrium behavior in a class of games that models asymmetric multiprize competitions in which players' costs need not be strictly increasing in their performance. Such costs accommodate various types of asymmetries, including head starts. Head starts capture incumbency advantages, prior investments, and technological differences. I provide an algorithm that constructs the unique equilibrium in which players do not choose weakly-dominated strategies, and apply it to study multiprize all-pay auctions with head starts. A comparison to the standard all-pay auction shows that the strategic effects of head starts differ substantially from those of differing valuations.Citation
Siegel, Ron. 2014. "Asymmetric Contests with Head Starts and Nonmonotonic Costs." American Economic Journal: Microeconomics, 6 (3): 59–105. DOI: 10.1257/mic.6.3.59Additional Materials
JEL Classification
- D11 Consumer Economics: Theory
- D44 Auctions
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