Multi-player race

• Published in: Journal of economic behavior & organization Vol. 149; pp. 123 - 136
• Main Authors: Doğan, Serhat, Karagözoğlu, Emin, Keskin, Kerim, Sağlam, Çağrı
• Format: Journal Article
• Language: English
• Published: Elsevier B.V 01-05-2018
• Subjects: Contests; Discouragement effect; Dynamic games; Momentum effect; Race; D74; Momentum effect; Contests; Discouragement effect; Race; Dynamic games; D72; C72
• ISSN: 0167-2681; 1879-1751
• DOI: 10.1016/j.jebo.2018.03.008

•We study a multi-player race and characterize subgame perfect Nash equilibrium.•A rather extreme form of discouragement, which is not present in a two-player race, arises.•We provide results on the momentum effect and total rent dissipation.
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.