Buying winners

Charles Louis-Sidois

Games and Economic Behavior, 2024, vol. 143, issue C, 1-11

Abstract: Two principals with heterogenous budgets compete to buy the best agent (the winner). First, the principals make initial offers to the agents before the winner is known. Then, if the winner has not accepted any offer, the principals make a second round of offers after the winner is revealed. In equilibrium, the principal with the higher budget offers her entire budget to the winner after he is revealed. The principal with the lower budget makes an offer to one agent before the winner is revealed. The timing of offers favors the high-budget principal: the low-budget principal faces adverse selection because only an agent with a low win probability accepts her offer. Moreover, the probability that the high-budget principal buys the winner increases with the number of agents. Finally, limiting pre-revelation offers favors the high-budget principal, while the opposite is true for post-revelation limits.

Keywords: Adverse selection; Colonel Blotto; Contests (search for similar items in EconPapers)
JEL-codes: C72 D72 P48 (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0899825623001665
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:143:y:2024:i:c:p:1-11

DOI: 10.1016/j.geb.2023.10.016

Access Statistics for this article

Games and Economic Behavior is currently edited by E. Kalai

More articles in Games and Economic Behavior from Elsevier
Bibliographic data for series maintained by Catherine Liu ().