Deadlines in Stochastic Contests

28 Pages Posted: 24 Oct 2010 Last revised: 11 Nov 2014

See all articles by Matthias Lang

Matthias Lang

Ludwig Maximilian University of Munich (LMU) - Faculty of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Christian Seel

Maastricht University

Philipp Strack

Yale, Department of Economics

Date Written: August 20, 2013

Abstract

We consider a two-player contest model in which breakthroughs arrive according to privately observed Poisson processes. Each player's process continues as long as she exerts costly effort. The player who collects most breakthroughs until a predetermined deadline wins a prize.

We derive Nash equilibria of the game depending on the deadline. For short deadlines, there is a unique equilibrium in which players use identical cutoff strategies, i.e., they continue until they have a certain number of successes. If the deadline is long enough, the symmetric equilibrium distribution of an all-pay auction is an equilibrium distribution over successes in the contest. Expected efforts may be maximal for a short or intermediate deadline.

Keywords: Contest, All-Pay Auction, Research Tournament

JEL Classification: C72, C73, D81

Suggested Citation

Lang, Matthias and Seel, Christian and Strack, Philipp, Deadlines in Stochastic Contests (August 20, 2013). Journal of Mathematical Economics, Vol. 52, p. 134-142, Available at SSRN: https://ssrn.com/abstract=1696067 or http://dx.doi.org/10.2139/ssrn.1696067

Matthias Lang (Contact Author)

Ludwig Maximilian University of Munich (LMU) - Faculty of Economics ( email )

Ludwigstrasse 28
Munich, D-80539
Germany

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Christian Seel

Maastricht University ( email )

P.O. Box 616
Maastricht, 6200MD
Netherlands
0031 433883651 (Phone)

Philipp Strack

Yale, Department of Economics ( email )

28 Hillhouse Ave
New Haven, CT 06520-8268
United States

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