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Dynamic common-value contests

Author

Listed:
  • Toomas Hinnosaar
Abstract
In this paper, I study dynamic common-value contests. Agents arrive over time and expend efforts to compete for prizes that are allocated proportionally according to efforts exerted. This model can be applied to a number of examples, including rent-seeking, lobbying, advertising, and R&D competitions. I provide a full characterization of equilibria in dynamic common-value contests and use it to study their properties, including comparative statics, earlier-mover advantage, and large contests. I show that information about other players’ efforts plays an important role in determining the total effort and that the total effort is strictly increasing with the information that becomes available.

Suggested Citation

  • Toomas Hinnosaar, 2016. "Dynamic common-value contests," Carlo Alberto Notebooks 479, Collegio Carlo Alberto.
    • Handle: RePEc:cca:wpaper:479
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    References listed on IDEAS

    as
    1. Lazear, Edward P & Rosen, Sherwin, 1981. "Rank-Order Tournaments as Optimum Labor Contracts," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 841-864, October.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    contests; sequential games; contest design; rent-seeking; R&D; advertising;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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