Gambling in contests

• 成果类型: Article
• 署名作者: Seel, Christian; Strack, Philipp
• 署名单位: Maastricht University; University of Bonn
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2013.07.005
• 发表日期: 2013
• 页码: 2033-2048
• 关键词: Discontinuous games; contests; Relative performance pay; Risk-taking behavior

摘要

This paper presents a strategic model of risk-taking behavior in contests. Formally, we analyze an n-player winner-take-all contest in which each player decides when to stop a privately observed Brownian motion with drift. A player whose process reaches zero has to stop. The player with the highest stopping point wins. Unlike the explicit cost for a higher stopping time in a war of attrition, here, higher stopping times are riskier, because players can go bankrupt. We derive a closed-form solution of a Nash equilibrium outcome. In equilibrium, highest expected losses occur at an intermediate negative value of the drift. (C) 2013 Elsevier Inc. All rights reserved.