Investment on human capital in a dynamic contest model
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Date
2019
Authors
Keskin, Kerim
Sağlam, Çağrı
Journal Title
Journal ISSN
Volume Title
Publisher
Walter De Gruyter Gmbh
Abstract
Although most contest games are modeled in such a way that the outcome depends only on the efforts exerted by the contestants what is arguably more important is the contestants' effective efforts which may be influenced also by their ability human capital strength etc. In this paper we investigate an extensive model including such an effectiveness parameter and analyze the optimal investment behavior in a dynamic conflict framework. At each period two contestants compete for a common prize by choosing contest efforts and investment levels. Each contestant's investment accumulates as his/her human capital which depreciates through time. Who wins the component contest at a particular period is determined by the contestants' effective efforts defined as increasing functions of their efforts and human capitals. Following the analysis of subgame perfect Nash equilibrium in a two-period model and of open-loop equilibrium in an infinite-horizon model we provide intuitive comparative static results.
Description
Keywords
Contests, Dynamic contests, Investment, Effectiveness, Human capital
Turkish CoHE Thesis Center URL
Citation
3
WoS Q
Q4
Scopus Q
Q2
Source
Volume
23
Issue
1