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A tug-of-war team contest

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  • Häfner, Samuel

Abstract

This paper analyzes a tug-of-war contest between two teams. In each round of the tug-of-war, a pair of agents from the opposing teams competes in a private value all-pay auction with asymmetric value distributions and effort effectiveness. Whichever team arrives first at a given lead in terms of battle victories over the opponent wins the tug-of-war. There exists a unique Markov-perfect equilibrium in bidding strategies which depend on the respective player's valuation and the current state of the tug-of-war. We derive rich comparative statics for this equilibrium by using the fact that the state of the tug-of-war evolves according to a time-homogeneous absorbing Markov chain.

Suggested Citation

  • Häfner, Samuel, 2017. "A tug-of-war team contest," Games and Economic Behavior, Elsevier, vol. 104(C), pages 372-391.
    • Handle: RePEc:eee:gamebe:v:104:y:2017:i:c:p:372-391
    DOI: 10.1016/j.geb.2017.04.013
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    Cited by:

    1. Dong, Lu & Huang, Lingbo, 2019. "Is there no ‘I’ in team? Strategic effects in multi-battle team competition," Journal of Economic Psychology, Elsevier, vol. 75(PB).

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    More about this item

    Keywords

    Team contests; Multi-stage contests; Tug-of-war; All-pay auction; Absorbing Markov chain;
    All these keywords.

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War

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