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Difference-form contest success functions and effort levels in contests
Authors:Kyung Hwan Baik
Affiliation:Department of Economics, Sung Kyun Kwan University, Seoul 110-745, South Korea
Abstract:We examine players' equilibrium effort levels in a contest with difference-form contest success functions in which two players compete with each other to win a prize. We show the following. At the pure-strategy Nash equilibrium of a simultaneous-move game, and in the subgame-perfect equilibrium of a sequential-move game, only one of the players expends effort or neither player expends effort. If one player's composite strength is far greater than the other player's, only the player with greater composite strength expends effort whether they move simultaneously or sequentially. If the players' valuations for the prize and their marginal probabilities of winning at (0, 0) are sufficiently small, neither player expends effort whether they move simultaneously or sequentially.
Keywords:Contests   Difference-form contest success functions   Effort levels
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