Contests with Rank-Order Spillovers
April 2009
Research Paper
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This paper presents a unified framework for characterizing symmetric equilibrium in simultaneous move, two-player, rank-order contests with complete information, in which each player's strategy generates direct or indirect affine "spillover" effects that depend on the rank-order of her decision variable. These effects arise in natural interpretations of a number of important economic environments, as well as in classic contests adapted to recent experimental and behavioral models where individuals exhibit inequality aversion or regret. We provide the closed-form solution for the symmetric Nash equilibria of this class of games, and show how it can be used to directly solve for equilibrium behavior in auctions, pricing games, tournaments, R&D races, models of ligitation, and a host of other contests.
- C72 : Noncooperative Games
- C73 : Stochastic and Dynamic Games; Evolutionary Games
- D43 : Oligopoly and Other Forms of Market Imperfection
- D44 : Auctions
- D74 : Conflict; Conflict Resolution; Alliances
- equilibrium
- player
- auction
- strategy
- lemma
- proposition
- price
- spillover
- mixed-strategy
- equation
- contest
- equilibria
- nondegenerate
- condition
- parameter
- model
- mixed-strategy equilibrium
- distribution
- mass point
- point
