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Endogenous timing in general rent-seeking and conflict models

Abstract : We examine simultaneous versus sequential choice of effort in a two-player contest. The timing of moves, determined in a preplay stage prior to the contest subgame, as well as the value of the prize is allowed to be endogenous. Contrary to endogenous timing models with an exogenously fixed prize the present paper finds the following: (1) Players may decide to choose their effort simultaneously in the subgame perfect equilibrium (SPE) of the extended game. (2) The SPE does not need to be unique, in particular, there is no unique SPE with sequential moves if the direct costs of effort are zero. (3) Symmetry among players does not rule out incentives for precommitment to effort locally away from the Cournot-Nash level. (4) Finally, there may be no correlation between win probability and strategic incentives in our framework; a finding most central in the analysis of fixedprize contests.
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Submitted on : Friday, April 20, 2012 - 9:00:38 AM
Last modification on : Tuesday, October 26, 2021 - 2:12:02 PM

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Magnus Hoffmann, Grégoire Rota-Graziosi. Endogenous timing in general rent-seeking and conflict models. Games and Economic Behavior, Elsevier, 2012, 75 (1), pp.168-184. ⟨10.1016/j.geb.2011.12.001⟩. ⟨halshs-00689738⟩



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