Bidding in Hierarchies

Konrad, Kai A.

doi:10.2139/ssrn.504982

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Bidding in Hierarchies

WZB, Markets and Political Economy Working Paper No. SP II 2003-27

12 Pages Posted: 21 Feb 2004

See all articles by Kai A. Konrad

Kai A. Konrad

Max Planck Institute for Tax Law and Public Finance; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute for Economic Research); IZA Institute of Labor Economics

Date Written: December 2003

Abstract

This paper reconsiders the comparison between hierarchical contests and single-stage contests. A condition is given that characterizes whether and when the aggregate equilibrium payoff of contestants is higher in the single-stage contest, and when the single-stage contest is more likely to award the prize to the contestant who values it most highly. The outcome depends on inter- and intra-group heterogeneity, and is not driven by free-rider incentives.

Keywords: Contest, hierarchies, rent dissipation

JEL Classification: D72, D74

Suggested Citation: Suggested Citation

Konrad, Kai A., Bidding in Hierarchies (December 2003). WZB, Markets and Political Economy Working Paper No. SP II 2003-27, Available at SSRN: https://ssrn.com/abstract=504982 or http://dx.doi.org/10.2139/ssrn.504982