Dynamic Contests with Resource Constraints
Economics Department, Ben-Gurion University
Last modified: January 17, 2011
Presentation date: 03/12/2011 4:30 PM in NH 1130, Session B
We study a dynamic contest between two players who compete against each other in n different stages. The players have common winning values that may vary over the stages as well as heterogeneous resource budgets that decrease within the stages proportionally to the resources allocated in the previous stages. We find a subgame-perfect equilibrium of this dynamic contest and show that when the winning value is equal between the stages, the players' resource allocations are weakly decreasing over the stages. We also study the effect of several distributions of winning values on the players' resource allocations. We show both the distribution of winning values that balances the players' resource allocations and the distribution of winning values that maximizes the players' total resource allocations.