All‐Pay Contests | Zendy

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All‐Pay Contests

Author(s) -

Siegel Ron

Publication year - 2009

Publication title -

econometrica

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 16.7

H-Index - 199

eISSN - 1468-0262

pISSN - 0012-9682

DOI - 10.3982/ecta7537

Subject(s) - common value auction , sunk costs , economics , competition (biology) , microeconomics , class (philosophy) , market power , production (economics) , capital (architecture) , computer science , history , ecology , monopoly , archaeology , artificial intelligence , biology

This paper studies a class of games, “all‐pay contests,” which capture general asymmetries and sunk investments inherent in scenarios such as lobbying, competition for market power, labor‐market tournaments, and R&D races. Players compete for one of several identical prizes by choosing a score. Conditional on winning or losing, it is weakly better to do so with a lower score. This formulation allows for differing production technologies, costs of capital, prior investments, attitudes toward risk, and conditional and unconditional investments, among others. I provide a closed‐form formula for players' equilibrium payoffs and analyze player participation. A special case of contests is multiprize, complete‐information all‐pay auctions.

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