Asymmetric Contests with Conditional Investments

Siegel, Ron

doi:10.1257/aer.100.5.2230

Cited by 101 publications

(64 citation statements)

References 33 publications

(63 reference statements)

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“…Most of this literature analyzes static models (e.g., Tullock, 1980, Lazear and Rosen, 1981, Hillman and Samet, 1987, and Siegel, 2009, 2010. Most real-world contests, however, are conducted over time rather than being a one-shot interaction; for example, think about procurement contests, job promotion contests, political campaigns, or sports leagues.…”

Section: Introductionmentioning

confidence: 99%

Continuous Time Contests with Private Information

Seel

Strack

2016

Mathematics of OR

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This paper introduces a class of contest models in which each player decides when to stop a privately observed Brownian motion with drift and incurs costs depending on his stopping time. The player who stops his process at the highest value wins a prize.We prove existence and uniqueness of a Nash equilibrium outcome and derive the equilibrium distribution in closed form. As the variance tends to zero, the equilibrium outcome converges to the symmetric equilibrium of an all-pay auction. For two players and constant costs, each player's equilibrium profit decreases if the drift increases, the variance decreases, or the costs decrease.

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Section: Introductionmentioning

confidence: 99%

Continuous Time Contests with Private Information

Seel

Strack

2016

Mathematics of OR

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“…They show that, depending on the degree of heterogeneity among the players, only the strongest contestants are active in equilibrium. As Baye et al (1996) and Siegel (2009Siegel ( , 2010) point out, a similar …nding also holds for the all-pay auction with complete information. In equilibrium, only the strongest contestants choose positive e¤orts with a positive probability.…”

Section: Related Literaturementioning

confidence: 62%

Externalities in recruiting

Kräkel

Szech

Bieberstein

2014

Journal of Economic Behavior & Organization

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External recruiting at least weakly improves the quality of the pool of applicants, but the incentive implications are less clear. Using a contest model, this paper investigates the pure incentive e¤ects of external recruiting. Our results show that if workers are heterogeneous, the opening of a …rm's career system may lead to a homogenization of the pool of contestants and, thus, encourage the …rm's high ability workers to exert more e¤ort. If this positive e¤ect outweighs the discouragement of low ability workers, the …rm will bene…t from external recruiting. If, however, the discouragement e¤ect dominates the homogenization e¤ect, the …rm should disregard external recruiting. In addition, product market competition makes opening of the career system less attractive for a …rm since it increases the incentives of its competitors'workers and hence strengthens the competitors.

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“…In a complete information environment, Baye et al (1996) characterizes the set of equilibria. Siegel (2009) and Siegel (2010) recently greatly increased the understanding of complete information environments by allowing for a variety of asymmetries among bidders. In addition, Tullock contests, in which the highest bidder does not win with certainty, are the subject of a similarly growing literature; see e.g., Tullock (1980) and Cornes and Hartley (2005).…”

Section: Introductionmentioning

confidence: 99%

Two-bidder all-pay auctions with interdependent valuations, including the highly competitive case

Rentschler

Turocy

2016

Journal of Economic Theory

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We analyze symmetric, two-bidder all-pay auctions with interdependent valuations and discrete type spaces. Relaxing previous restrictions on the distribution of types and the valuation structure, we present a construction that characterizes all symmetric equilibria. We show how the search problem this construction faces can be complex. In equilibrium, randomization can take place over disjoint intervals of bids, equilibrium supports can have a rich structure, and non-monotonicity of the equilibrium may result in a positive probability of allocative inefficiency when the value of the prize is not common. Particular attention is paid to the case in which an increase in a bidder's posterior expected value of winning the auction is likely to be accompanied by a corresponding increase for the other bidder. Such environments are "highly competitive" in the sense that the bidder's higher valuation also signals that the other bidder has an incentive to bid aggressively.JEL Classifications: D44; D82; D72.

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Asymmetric Contests with Conditional Investments

Cited by 101 publications

References 33 publications

Continuous Time Contests with Private Information

Continuous Time Contests with Private Information

Externalities in recruiting

Two-bidder all-pay auctions with interdependent valuations, including the highly competitive case

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