Hybrid All-Pay and Winner-Pay Contests
American Economic Journal: Microeconomics
vol. 12,
no. 4, November 2020
(pp. 144-69)
Abstract
In many contests in economic and political life, both all-pay and winner-pay expenditures matter for winning. This paper studies such hybrid contests under symmetry and asymmetry. The symmetric model assumes very little structure but yields a simple closed-form solution. More contestants tend to lead to substitution toward winner-pay investments, and total expenditures are always lower than in the corresponding all-pay contest. With a biased decision process and two contestants, the favored contestant wins with a higher likelihood, chooses less winner-pay investments, and contributes more to total expenditures. An endogenous bias that maximizes total expenditures disfavors the high-valuation contestant but still makes her the more likely one to win.Citation
Lagerlöf, Johan N M. 2020. "Hybrid All-Pay and Winner-Pay Contests." American Economic Journal: Microeconomics, 12 (4): 144-69. DOI: 10.1257/mic.20180107Additional Materials
JEL Classification
- C72 Noncooperative Games
- D72 Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- D82 Asymmetric and Private Information; Mechanism Design
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