Manipulation of moves in sequential contests

Abstract

AbstractIn two-player Tullock contests with endogenous timing of moves, the weak player moves early and the strong player follows. This order of moves is the third-best outcome for a contest organiser as it leads to a contest with lower aggregate effort compared to a contest where the players move in reverse order (first best) or simultaneously (second best). We propose that if the contest organiser—who does not knowex antewhich player is the strong and which is the weak one—offers a lower price (effort cost) to the player(s) who choose(s) to exert effort early, she can achieve a greater payoff by affecting the contestants’ sequence of moves. We show that there exists no price that generates the first-best outcome. However, there is a price (or a range of prices) that induces both players to move early and receive it, leading to the second-best outcome. We also discuss the case where both players move early but only one receives the low price, e.g., lobbying or Instagram “giveaway” contests.