To Fight or to Give Up? Dynamic Contests with a Deadline

• 成果类型: Article
• 署名作者: Ryvkin, Dmitry
• 署名单位: State University System of Florida; Florida State University
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2021.4206
• 发表日期: 2022
• 页码: 8144-8165
• 关键词: Dynamic contest; time horizon; Brownian Motion; Momentum effect

摘要

We study dynamic contests between two players whose performance is determined jointly by effort and luck. The players observe each other???s positions in real time. There is a fixed deadline, and the player with a higher performance at the deadline wins the contest. We fully characterize the Markov perfect equilibrium for heterogeneous players. Effort is high when the players are tied but collapses quickly when one of them assumes a lead, due to a dynamic momentum effect. Therefore, total expected effort does not necessarily increase in the prize or in the players??? abilities. We discuss implications for contest design and propose splitting the contest to cool off competition and introducing optimal head-starts for heterogeneous players as possible solutions.