Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/195277
Title:

# A simple dynamic contest with a parameterized strength of competition

Authors:
García-Martínez, José A.
Year of Publication:
2018
Citation:
[Journal:] SERIEs - Journal of the Spanish Economic Association [ISSN:] 1869-4195 [Volume:] 9 [Year:] 2018 [Issue:] 3 [Pages:] 305-332
Abstract:
This paper analyzes the effect of competition in a dynamic contest in which agents of two types (A and B) differ in their expected performances; environments where type A outperforms type B are more frequent than those where B outperforms A. In each period, the population of agents is randomly matched in groups of n members (each group faces a particular environment), with the top k<n performing agents from each group being the winners of the prizes. Hence, the ratio \frac{k}{n} determines the proportion of winning agents in each group. This ratio also describes the strength of competition in the group: the lower \frac{k}{n} is, the higher the level of competition is. Our results show that type A eventually dominates the entire population with moderate competition, but type B survives in the long run for high levels of competition. Hence, we obtain that no matter how low the expected success rate of a type is, if the strength of competition is high enough those agents with the lowest expected success rate survive in the long run.
Subjects:
Contest
Competition
Strength of competition
Selection process
JEL:
D00
D23
C73
Persistent Identifier of the first edition:
Document Type:
Article
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