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The Stability of Dynamic Contests with Asymmetric and Endogenous Prizes

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  • Frederik Schmidt

    (University of Mainz)

Abstract

The paper develops a simple theoretical framework for analyzing repeated contests. At each stage of the infinitely repeated game, a Tullock contest is played by two players. We consider local stability of the Nash equilibrium with respect to adjustment speed and the level of the prize. The model is extended to an asymmetric valuation of the prize and to the case with an endogenous prize, where the level of the prize is influenced by the investments of the players.

Suggested Citation

  • Frederik Schmidt, 2008. "The Stability of Dynamic Contests with Asymmetric and Endogenous Prizes," Economics Bulletin, AccessEcon, vol. 3(4), pages 1-9.
    • Handle: RePEc:ebl:ecbull:eb-07c70037
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    File URL: http://www.accessecon.com/pubs/EB/2008/Volume3/EB-07C70037A.pdf
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    References listed on IDEAS

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    6. Moldovanu, Benny & Sela, Aner, 2006. "Contest architecture," Journal of Economic Theory, Elsevier, vol. 126(1), pages 70-96, January.
    7. Kooreman, Peter & Schoonbeek, Lambert, 1997. "The specification of the probability functions in Tullock's rent-seeking contest," Economics Letters, Elsevier, vol. 56(1), pages 59-61, September.
    8. R. D. Theocharis, 1960. "On the Stability of the Cournot Solution on the Oligopoly Problem," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 27(2), pages 133-134.
    9. Zhang, Jixiang & Da, Qingli & Wang, Yanhua, 2007. "Analysis of nonlinear duopoly game with heterogeneous players," Economic Modelling, Elsevier, vol. 24(1), pages 138-148, January.
    10. Konrad, Kai A., 2007. "Strategy in contests: an introduction [Strategie in Turnieren – eine Einführung]," Discussion Papers, Research Unit: Market Processes and Governance SP II 2007-01, WZB Berlin Social Science Center.
    11. Chung, Tai-Yeong, 1996. "Rent-Seeking Contest When the Prize Increases with Aggregate Efforts," Public Choice, Springer, vol. 87(1-2), pages 55-66, April.
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    Cited by:

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    2. Akio Matsumoto & Ferenc Szidarovszky, 2022. "Stability of dynamic asymmetric contests with endogenous prizes," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 17(1), pages 29-40, January.

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    More about this item

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D7 - Microeconomics - - Analysis of Collective Decision-Making

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