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Winner-pay contests

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Abstract

We analyze winner-pay contests in which players select bids, the winner is determined probabilistically through a contest success function, and only the winner must pay her bid. We show that a pure-strategy Nash equilibrium exists and is unique under weak assumptions on the contest success function. We determine the Nash equilibrium for several examples. We also consider how equilibrium bids are influenced by private information about the value of winning the contest.

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Authors and Affiliations

  1. Department of Economics, E. Claiborne Robins School of Business, University of Richmond, 1 Gateway Rd., Richmond, VA, 23173, USA

    Andrew J. Yates

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  1. Andrew J. Yates
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Correspondence to Andrew J. Yates.

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Yates, A.J. Winner-pay contests. Public Choice 147, 93–106 (2011). https://doi.org/10.1007/s11127-010-9605-x

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  • DOI: https://doi.org/10.1007/s11127-010-9605-x

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