I am indebted to Ed Lazear and Ilya Segal for their continuous guidance and encouragement. I thank Jeremy Bulow for many beneficial discussions. I thank Larry Samuelson and four referees for very detailed comments. I thank Julio González-Díaz, Matthew Jackson, Sunil Kumar, Jonathan Levin, Stephen Morris, Marco Ottaviani, Kareen Rozen, Yuval Salant, Andrzej Skrzypacz, Balázs Szentes, Michael Whinston, Robert Wilson, Eyal Winter, and seminar participants at Chicago GSB, CSIO-IDEI, Cornell, Hebrew University, Northwestern, NYU Stern, Penn State, Stanford, Tel-Aviv, Toronto, and Yale for helpful comments and suggestions.
Version of Record online: 15 DEC 2008
© 2009 The Econometric Society
Volume 77, Issue 1, pages 71–92, January 2009
How to Cite
Siegel, R. (2009), All-Pay Contests. Econometrica, 77: 71–92. doi: 10.3982/ECTA7537
- Issue online: 15 DEC 2008
- Version of Record online: 15 DEC 2008
- Manuscript received November, 2007; final revision received July, 2008.
This paper studies a class of games, “all-pay contests,” which capture general asymmetries and sunk investments inherent in scenarios such as lobbying, competition for market power, labor-market tournaments, and R&D races. Players compete for one of several identical prizes by choosing a score. Conditional on winning or losing, it is weakly better to do so with a lower score. This formulation allows for differing production technologies, costs of capital, prior investments, attitudes toward risk, and conditional and unconditional investments, among others. I provide a closed-form formula for players' equilibrium payoffs and analyze player participation. A special case of contests is multiprize, complete-information all-pay auctions.