Your Failure is My Opportunity - Effects of Elimination in Contests
33 Pages Posted: 23 Feb 2018 Last revised: 22 May 2019
Date Written: May 20, 2019
Abstract
In this paper, we consider a sequence of multi-prize all-pay auctions, where the contestants who exert the lowest efforts in a round are eliminated. We analyze if and how the behavior of contestants is influenced by the possibility that strong rivals are eliminated along the way. The conditions under which behavior is not influenced are rather restrictive. For cases where these conditions are not met, we derive equilibria in a two-period model. We compare our equilibrium predictions to those of a static model and a two-stage contest where the sequential structure is not announced in the first round.
Keywords: Elimination contest, identity-dependent externality
JEL Classification: C72, D44
Suggested Citation: Suggested Citation