Contests with multiplicative sabotage effect
This paper investigates a two-player contest with a multiplicative sabotage effect, showing it can be converted into a standard Tullock contest with a nonlinear, endogenous cost function. We prove the existence and uniqueness of a pure strategy equilibrium. Our findings suggest that sabotage activit...
| Main Authors: | , , , |
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| Other Authors: | |
| Format: | Journal Article |
| Language: | English |
| Published: |
2024
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| Online Access: | https://hdl.handle.net/10356/179488 |
| _version_ | 1811688854242983936 |
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| author | Liu, Haoming Lu, Jingfeng Riyanto, Yohanes Eko Wang, Zhe |
| author2 | School of Social Sciences |
| author_facet | School of Social Sciences Liu, Haoming Lu, Jingfeng Riyanto, Yohanes Eko Wang, Zhe |
| author_sort | Liu, Haoming |
| collection | NTU |
| description | This paper investigates a two-player contest with a multiplicative sabotage effect, showing it can be converted into a standard Tullock contest with a nonlinear, endogenous cost function. We prove the existence and uniqueness of a pure strategy equilibrium. Our findings suggest that sabotage activities can be more pronounced when the productivity difference between players is small, and the more productive player might not necessarily undergo more attacks. Lazear and Rosen (1981) first-best outcome is attainable for symmetric players if sabotage is sufficiently ineffective or costly. When it is unattainable, optimal pay difference induces positive sabotage only if sabotage is ineffective but relatively inexpensive. Optimal pay difference decreases with effectiveness and increases with the marginal cost of destructive effort, exhibiting a non-monotonic relationship with productive-effort effectiveness. This non-monotonicity contrasts with the monotonicity of the first best pay difference when sabotage is infeasible. |
| first_indexed | 2024-10-01T05:38:49Z |
| format | Journal Article |
| id | ntu-10356/179488 |
| institution | Nanyang Technological University |
| language | English |
| last_indexed | 2024-10-01T05:38:49Z |
| publishDate | 2024 |
| record_format | dspace |
| spelling | ntu-10356/1794882024-08-05T02:41:03Z Contests with multiplicative sabotage effect Liu, Haoming Lu, Jingfeng Riyanto, Yohanes Eko Wang, Zhe School of Social Sciences Social Sciences Rank-order tournament Sabotage This paper investigates a two-player contest with a multiplicative sabotage effect, showing it can be converted into a standard Tullock contest with a nonlinear, endogenous cost function. We prove the existence and uniqueness of a pure strategy equilibrium. Our findings suggest that sabotage activities can be more pronounced when the productivity difference between players is small, and the more productive player might not necessarily undergo more attacks. Lazear and Rosen (1981) first-best outcome is attainable for symmetric players if sabotage is sufficiently ineffective or costly. When it is unattainable, optimal pay difference induces positive sabotage only if sabotage is ineffective but relatively inexpensive. Optimal pay difference decreases with effectiveness and increases with the marginal cost of destructive effort, exhibiting a non-monotonic relationship with productive-effort effectiveness. This non-monotonicity contrasts with the monotonicity of the first best pay difference when sabotage is infeasible. 2024-08-05T02:41:02Z 2024-08-05T02:41:02Z 2024 Journal Article Liu, H., Lu, J., Riyanto, Y. E. & Wang, Z. (2024). Contests with multiplicative sabotage effect. Theory and Decision. https://dx.doi.org/10.1007/s11238-024-09983-x 0040-5833 https://hdl.handle.net/10356/179488 10.1007/s11238-024-09983-x 2-s2.0-85191760917 en Theory and Decision © 2024 The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature. All rights reserved. |
| spellingShingle | Social Sciences Rank-order tournament Sabotage Liu, Haoming Lu, Jingfeng Riyanto, Yohanes Eko Wang, Zhe Contests with multiplicative sabotage effect |
| title | Contests with multiplicative sabotage effect |
| title_full | Contests with multiplicative sabotage effect |
| title_fullStr | Contests with multiplicative sabotage effect |
| title_full_unstemmed | Contests with multiplicative sabotage effect |
| title_short | Contests with multiplicative sabotage effect |
| title_sort | contests with multiplicative sabotage effect |
| topic | Social Sciences Rank-order tournament Sabotage |
| url | https://hdl.handle.net/10356/179488 |
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