Prize Sharing in Collective Contests

Nitzan, Shmuel; Ueda, Kaoru

doi:10.2139/ssrn.1780830

Cited by 21 publications

(27 citation statements)

References 98 publications

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“…Furthermore, it may occur, even though they announce publicly their sharing rules, because their announced sharing rules are unverifiable. Nitzan and Ueda () say that, without restrictive assumptions that decisions made within a group are transparent and detection of changes is easy, a model of group contests with observable sharing rules is questionable.…”

Section: Introductionmentioning

confidence: 99%

“…Bloch () provides a survey of the theoretical literature on alliance formation, and then considers different models of endogenous formation of alliances in conflicts. Recently, unlike the previous papers, Baik and Lee () and Nitzan and Ueda () consider collective rent seeking between groups in which each group's sharing rule is private information. Baik and Lee () study collective rent seeking between two groups in which each group has the option of making its sharing rule observable or unobservable.…”

Section: Introductionmentioning

confidence: 99%

“…Baik and Lee () obtain the same result in the case of observable sharing rules. Nitzan and Ueda () study collective contests in which each group's sharing rule is endogenously determined and is unobservable to the other groups, and identify the cases where a larger group chooses a more egalitarian sharing rule than a smaller group.…”

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confidence: 99%

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Endogenous Group Formation in Contests: Unobservable Sharing Rules

Baik

2015

Economics Manag Strategy

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We study contests in which players compete by expending irreversible effort to win a prize, the prize is awarded to one of the players, the winner shares the prize with other players in his group, if any, and each group's sharing rule is unobservable to the other groups and the singletons, if any, when the players expend their effort. The number of groups, their sizes, and the number of singletons are exogenous in the first model, whereas they are endogenous in the second model. We show that group formation occurs if the number of players is four or smaller, but does not occur otherwise. We examine the effect of endogenous group formation on total effort level and the profitability of endogenous group formation. In each of the two models, comparing the outcomes of the case of unobservable sharing rules with those of the case of observable sharing rules, we show that the two cases yield quite different outcomes.

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Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Endogenous Group Formation in Contests: Unobservable Sharing Rules

Baik

2015

Economics Manag Strategy

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“…Marreiros [2009] models them in a heterogeneous self-managed team production scenario, and Weikard et al [2006] analyze their impact on coalitions for greenhouse gas abatement. Nitzan and Ueda [2011] demonstrate how these rules completely eliminate the group-size paradox. Pfingsten [1991] and many others take an axiomatic approach to critically assess the impact of such rules on players' performances.…”

Section: Complete Versus Partial Collusion In Competing Coalitionsmentioning

confidence: 87%

Complete Versus Partial Collusion in Competing Coalitions

Palsule-Desai

2015

Int. Game Theory Rev.

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In this paper, we develop a non-cooperative game theoretic model for our problem context in which the competing producers adopt one of the two alternate production and marketing technologies -efficient and inefficient. We examine stability related implications of the producers' decisions regarding the choices of (i) technologies, (ii) coalition formation, (iii) coalition form, (iv) intensity of collusion. The coalitions can adopt either complete collusion or partial collusion by determining intensity of collusion using endogenously determined sharing rules. The motivation for our study comes from the Costa Rican coffee industry and interesting findings presented in the existing literature focusing on a variety of competing-coalitions settings. Our results can be categorized as: (i) Nash equilibrium of the endogenously determined sharing rules, (ii) the equilibrium coalition forms, and (iii) stability of coalitions. They highlight the dynamics between the number of coalition producers and the cost of inefficiency. We show that the equilibrium sharing rules may have interior solutions and they are not necessarily (a)symmetric. We also show that both coalitions forming complete collusion of the respective producers in not always a Nash equilibrium, and the equilibrium coalition forms need not be (a)symmetric. Our main contribution to existing literature rests in determining the situations in which (i) competing players form coalitions, and (ii) they adopt the coalition form of either complete or partial collusion. Moreover, we provide an alternate explanation to why competing producers horizontally merge in the presence of a competing coalition adopting partial collusion in spite of the merger paradox. We also show that none of the two types of producers considered in this paper have any incentives in not making the information on their coalition form public. Moreover, we establish that situations yielding stable coalitions always exist. Our results demonstrate that the cost advantage to the efficient producers decreases in the number of producers adopting the efficient technology, and the coalition stability related conditions need not imply better profitability for one type of producer vis-à-vis the other. Our model essentially provides a platform for future research in a variety of competing-coalitions settings adopting endogenously determined sharing rules.

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“…Researchers have explored these sharing rules in a variety of settings. For instance, collective rent-seeking (Nitzan and Ueda 2011), the principal-agent problem in sports (Maxcy 2007), the common-property problem (Heintzelman et al 2009), cooperative production (Franke 2009), joint production games (Cornes and Hartley 2003), greenhouse gas abatement (Weikard et al 2006). These studies essentially show that the optimal allocation rule has an interior solution.…”

Section: Literature Reviewmentioning

confidence: 99%

Impact of equity and equality on stability and collusion in a decentralized network

Palsule-Desai

2015

Ann Oper Res

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We develop a noncooperative game theoretic model to examine network performance and stability related implications of allocation mechanisms that endogenously balance equity vis-à-vis equality, and hence, the degree of collusion among the network firms in a decentralized setting. We obtain the structural results and bounds for our model parameters in this regard by focusing on two important factors: (i) synergy between the firms, and (ii) the number of network firms. Our contribution to the existing literature is threefold in showing that: (i) perfect equality among the network firms can be suboptimal, (ii) explicit cooperation among the firms is not always necessary for the efficient network performance, and (iii) the network firms do not completely collude, and yet, network stability can be enhanced. By particularly modeling a two-tier network, we exhibit our results in a decentralized setting and highlight the role of a coordinating agent in enhancing competitiveness of the network firms. We demonstrate that inefficiencies and instability of decentralization can be eliminated by incorporating an additional degree of freedom in the network formation game. Our model and the structural results are applicable to networks such as producers' cooperatives, cartels, exclusive production facilities, industrial clusters, joint production and research facilities, etc., wherein the conflicts of equity-equality and degree of collusion are predominant.

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Prize Sharing in Collective Contests

Cited by 21 publications

References 98 publications

Endogenous Group Formation in Contests: Unobservable Sharing Rules

Endogenous Group Formation in Contests: Unobservable Sharing Rules

Complete Versus Partial Collusion in Competing Coalitions

Impact of equity and equality on stability and collusion in a decentralized network

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