Constrained contests with a continuum of battles

Sung Ha Hwang, Youngwoo Koh, Jingfeng Lu

    Research output: Contribution to journalArticlepeer-review

    1 Citation (Scopus)

    Abstract

    We study a contest problem in which two players compete on a continuum of battlefields by spending resources subject to some constraints on their strategies. Following Myerson (1993), we assume that each player's resource allocation on each battlefield is an independent random draw from the same distribution. Within each battlefield, the player who allocates a higher level of resources wins, but both players incur costs for resource allocation. To analyze this problem, we introduce a systematic way to identify equilibrium allocation strategies and show that any equilibrium strategy of a player renders the rival indifferent in terms of the “constraint-adjusted payoff”. Using this, we provide a complete characterization of equilibrium allocation strategies. We also show that whereas a symmetric budget constraint may induce players to spend more resources than in the case with no constraint, asymmetric budgets that are proportional to players' values of winning would eliminate this possibility.

    Original languageEnglish
    Pages (from-to)992-1011
    Number of pages20
    JournalGames and Economic Behavior
    Volume142
    DOIs
    Publication statusPublished - 2023 Nov

    Bibliographical note

    Publisher Copyright:
    © 2023 Elsevier Inc.

    Keywords

    • Constraint-adjusted payoffs
    • Constraints
    • Contest
    • Continuum of battles
    • Resource allocation

    ASJC Scopus subject areas

    • Finance
    • Economics and Econometrics

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