Deadlines in stochastic contests

M. Lang, C. Seel, P. Strack

Research output: Contribution to journalArticleAcademicpeer-review

Abstract

We consider a two-player contest model in which breakthroughs arrive according to privately observed Poisson processes. Each player's process continues as long as she exerts costly effort. The player who collects the most breakthroughs until a predetermined deadline wins a prize.

We derive Nash equilibria of the game depending on the deadline. For short deadlines, there is a unique equilibrium in which players use identical cutoff strategies, i.e., they continue until they have a certain number of successes. If the deadline is long enough, the symmetric equilibrium distribution of an all-pay auction is an equilibrium distribution over successes in the contest. Expected efforts may be maximal for a short or intermediate deadline.
Original languageEnglish
Pages (from-to)134-142
Number of pages9
JournalJournal of Mathematical Economics
Volume52
DOIs
Publication statusPublished - May 2014

Keywords

  • Contest
  • All-pay auction
  • Research tournament
  • DISSIPATION
  • CAPS

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