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Endogenous Timing in General Rent-Seeking and Conflict Models

Hoffmann, Magnus and Rota Graziosi, Gregoire (2010): Endogenous Timing in General Rent-Seeking and Conflict Models.

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Abstract

This paper examines simultaneous versus sequential choice of effort in a two player contest with a general contest success function. The timing of moves, determined in a pre-play stage prior to the contest-subgame, as well as the value of the prize is allowed to be endogenous. Contrary to endogenous timing models with an exogenously fixed prize the present paper finds the following. (1) Players may decide to choose their effort simultaneously in the subgame perfect equilibrium (SPE) of the extended game. (2) The SPE does not need to be unique, (3) in particular, there is no unique SPE with sequential moves if costs of effort are exclusively endogenously determined. (4) If the unique SPE is sequential play, the win probability in the NE is in no way crucial for the determination of an endogenous leadership. (5) Finally, symmetry among players does not rule out incentives for precommitment to effort locally away from the Nash-Cournot level.

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