Preemption Contests between Groups

Abstract

We consider a preemption game between groups where the first agent to take a costly action wins the prize on behalf of his group. We describe the equilibrium solution of this problem when players differ in their own costs of action and these costs are private information. The equilibrium is typically characterized by delay. The nature of the equilibrium depends on key parameters such as the number of groups and their size. More competition between groups reduces delay, whereas in larger groups members of a given cost type are more reluctant to act but may yield an earlier resolution of the conflict. We analyze asymmetries across groups, focusing on group size and strength of the externalities within groups.

Keywords: dynamic conflict, free riding, incomplete information, inter-group conflict, preemption, waiting

JEL Classification: D74, H41, L13