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The lifeboat problem

[working paper]

Konrad, Kai A.; Kovenock, Dan

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Corporate Editor Wissenschaftszentrum Berlin für Sozialforschung gGmbH
Abstract We study an all-pay contest with multiple identical prizes (lifeboat seats). Prizes are partitioned into subsets of prizes (lifeboats). Players play a two-stage game. First, each player chooses an element of the partition (a lifeboat). Then each player competes for a prize in the subset chosen (a seat). We characterize and compare the subgame perfect equilibria in which all players employ pure strategies or all players play identical mixed strategies in the first stage. We find that the partitioning of prizes allows for coordination failure among players when they play nondegenerate mixed strategies and this can shelter rents and reduce rent dissipation compared to some of the less efficient pure strategy equilibria. (author's abstract)
Keywords price; competition; playing; equilibrium; formation of prices; game theory; match
Classification National Economy
Document language English
Publication Year 2011
City Berlin
Page/Pages 20 p.
Series Discussion Papers / Wissenschaftszentrum Berlin für Sozialforschung, Schwerpunkt Märkte und Politik, Forschungsprofessur und Projekt The Future of Fiscal Federalism, SP II 2011-106
Status Published Version; reviewed
Licence Deposit Licence - No Redistribution, No Modifications