Hybrid All-Pay and Winner-Pay Contests

31 Pages Posted: 27 Sep 2017

See all articles by Johan N. M. Lagerlöf

Johan N. M. Lagerlöf

University of Copenhagen - Department of Economics

Date Written: August 30, 2017

Abstract

In many contests in economic and political life, both all-pay and winner-pay expenditures matter for winning. This paper studies such hybrid contests under symmetry and asymmetry. The symmetric model is very general but still yields a simple closed-form solution. More contestants tend to lead to substitution toward winner-pay investments, and total expenditures are always lower than in the corresponding all-pay contest. With a biased decision process and two contestants, the favored contestant wins with a higher likelihood, chooses less winner-pay investments, and contributes more to total expenditures. An endogenous bias that maximizes total expenditures disfavors the high-valuation contestant but still makes her the more likely one to win.

Keywords: rent-seeking, lobbying, influence activities, multiple influence channels, producer theory

JEL Classification: C72, D24, D72, D74

Suggested Citation

Lagerlof, Johan N. M., Hybrid All-Pay and Winner-Pay Contests (August 30, 2017). Available at SSRN: https://ssrn.com/abstract=3043104 or http://dx.doi.org/10.2139/ssrn.3043104

Johan N. M. Lagerlof (Contact Author)

University of Copenhagen - Department of Economics ( email )

Øster Farimagsgade 5
Bygning 26
1353 Copenhagen K.
Denmark

HOME PAGE: http://www.johanlagerlof.com/

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