Browsing by Subject "Contests"

Now showing 1 - 3 of 3

Open Access
Investment on human capital in a dynamic contest model
(De Gruyter, 2019) Keskin, K.; Sağlam, Hüseyin Çağrı
Although most contest games are modeled in such a way that the outcome depends only on the efforts exerted by the contestants, what is arguably more important is the contestants’ effective efforts which may be influenced also by their ability, human capital, strength, etc. In this paper, we investigate an extensive model including such an effectiveness parameter and analyze the optimal investment behavior in a dynamic conflict framework. At each period, two contestants compete for a common prize by choosing contest efforts and investment levels. Each contestant’s investment accumulates as his/her human capital which depreciates through time. Who wins the component contest at a particular period is determined by the contestants’ effective efforts, defined as increasing functions of their efforts and human capitals. Following the analysis of subgame perfect Nash equilibrium in a two-period model and of open-loop equilibrium in an infinite-horizon model, we provide intuitive comparative static results.
Open Access
Multi-player race
(Elsevier B.V., 2018) Doğan, S.; Karagözoğlu, Emin; Keskin, K.; Sağlam, Ç.
We present a model of race with multiple players and study players’ effort choices and expected prizes in equilibrium. We show that, in equilibrium, once any two players win one battle each, the remaining players do not exert any effort anymore. This turns the continuation game into a two-player race. This is different than the results in previous two-player models of race, which report that all states of the game are reached with positive probabilities. We also provide a set of comparative static results on the effects of the number of players and the victory threshold.
Open Access
Perseverance and suspense in tug-of-war
(Elsevier, 2021-01-06) Karagözoğlu, Emin; Sağlam, Hüseyin Çağrı; Turan, A. R.
We study a tug-of-war game between two players using the lottery contest success function (CSF) and a quadratic cost (of effort) function. We construct a pure strategy symmetric Markov perfect equilibrium of this game, show that it is unique, and provide closed-form solutions for equilibrium strategies and values. In stark contrast to a model of tug-of-war with an all-pay auction CSF, players exert positive efforts until the very last battle in this equilibrium. We deliver a set of empirically appealing results on effort dynamics.