Working Paper: CEPR ID: DP7424
Authors: Kai A. Konrad; Dan Kovenock
Abstract: We study an all-pay contest with multiple identical prizes ("lifeboat seats"). Prizes are partitioned into subsets of prizes ("lifeboats"). Players play a two-stage game. First, each player chooses an element of the partition ("a lifeboat"). Then each player competes for a prize in the subset chosen ("a seat"). We characterize and compare the subgame perfect equilibria in which all players employ pure strategies or all players play identical mixed strategies in the first stage. We find that the partitioning of prizes allows for coordination failure among players when they play nondegenerate mixed strategies and this can shelter rents and reduce rent dissipation compared to some of the less efficient pure strategy equilibria.
Keywords: All-pay contest; Lifeboat; Multiple prizes; Rent dissipation
JEL Codes: D72; D74
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| partitioning of prizes (D44) | coordination failures (P11) |
| coordination failures (P11) | rent dissipation (D45) |
| number of players and prizes (C72) | expected payoffs (J33) |
| symmetric mixed strategies (C72) | expected payoff (D81) |
| number of prizes >= number of players (C72) | all players receive a prize with zero expenditure (D44) |
| more players than prizes (C72) | complete dissipation (Y40) |