The symmetric two-player Hirshleifer (1989) contest is shown to admit a unique equilibrium. The support of the equilibrium strategy is finite and includes, in particular, the zero expenditure level. We also establish a lower bound for the cardinality of the support and an upper bound for the...

We characterize the equilibrium set of the n-player Hirshleifer contest with homogeneous valuations. A symmetric equilibrium always exists. It necessarily corresponds to multilateral peace for sufficient noise and uses finite-support randomized strategies otherwise. Asymmetric equilibria are...

While the game-theoretic analysis of conflict is often based upon the assumption of multiplicative noise, additive noise such as assumed by Hirshleifer (1989) may be equally plausible depending on the application. In this paper, we examine the equilibrium set of the n-player difference-form...

While the game-theoretic analysis of conflict is often based on the assumption of multiplicative noise, additive noise such as considered by Hirshleifer (1989) may be equally plausible depending on the application. In this paper, we examine the equilibrium set of the n-player difference-form...

Optimal rank-order tournaments have traditionally been studied using a first-order approach. The present analysis relies instead on the construction of an "upper envelope" over all incentive compatibility conditions. It turns out that the first-order approach is not innocuous. For example, in...

Szidarovszky and Okuguchi (Games and Economic Behavior, 1997) have provided useful conditions for the existence of a unique pure-strategy Nash equilibrium in rent-seeking games of complete information. In this paper, we generalize their results to contests with incomplete informa tion. Two...

This paper offers a game theoretic model of liquidity provision through repeated central bank tenders, in the spirit of the operational framework of the Eurosystem. Banks are required to satisfy reserve requirements subject to an averaging provision over individual maintenance periods, and...

On several occasions during the period 2001-2003, the European Central Bank (ECB) decided to deviate from its “neutral” benchmark allotment rule, with the effect of not alleviating a temporary liquidity shortage in the banking system. This is remarkable because it implied the possibility of...

We model the interbank market for overnight credit with heterogeneous banks and asymmetric information. An unsophisticated bank just trades to compensate its liquidity imbalance, while a sophisticated bank will exploit its private information about the liquidity situation in the market. It is...

In certain market environments, a large investor may benefit from building up a futures position first and trading subsequently in the spot market (Kumar and Seppi, 1992). The present paper identifies a variation of this type of manipulation that might occur in money markets with an interest...