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The timing of contests

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Article
Author/s: 
Gilles Grandjean, Petros G. Sekeris
Defence and Peace Economics
Issue number: 
Volume 26, Issue 3
Publisher: 
Tylor & Francis
Year: 
2015
Journal pages: 
1-13
We develop a simple model to analyze the timing of contests. When the odds of winning a contest are exogenously given – we show that if either the players discount the future or if the total cost of contest is smaller in the future – there exist subgame perfect equilibria where both players settle, anticipating a contest in the future. With endogenous efforts, the aggregate efforts expanded in a contest are smaller if the contest occurs in the future when the relative effort productivities remain constant or diverge over time, thus creating scope for delay in contests. When the effort productivities converge over time, the total efforts may be greater under a future contest. As a consequence, players either settle over the two periods, or else they initiate a contest immediately.
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