Dynamic Multi-Activity Contests
22 Pages Posted: 28 Jul 2010
Date Written: July 27, 2010
In many contests, players can influence the outcome through efforts in multiple activities, several of which can be chosen before others. In this paper, we develop a model of dynamic multi-activity contests. Players simultaneously choose efforts in long-run activities, observe each other’s efforts in these activities, and then simultaneously choose efforts in short-run activities. A player’s long-run and short-run efforts complement each other in determining the player’s probability of winning. We compare the outcomes of this two-stage model to those of the corresponding model in which players do not observe each other’s first-stage efforts before the second stage and thus effectively choose efforts in all activities simultaneously. Interestingly, effort expenditures are always lower in the sequential multi-activity contest than in the simultaneous multi-activity contest. The implications of this result for the organization of military, litigation, innovation, academic, and sporting contests are highlighted.
Keywords: Dynamic Multi-Activity Contests, Long Run, Short Run, Contest Success Function, Complementarity, Commitment, Rent Dissipation
JEL Classification: C72, D72
Suggested Citation: Suggested Citation