Correlated play in weakest-link and best-shot group contests (Q6146448)

This paper analyzes group all-pay contests in which players within a group use a public randomization device to correlate their actions, relaxing the assumption that they act simultaneously and independently. This is done for weakest-link and best-shot impact functions, which lie on the opposite sides of the effort complementarity spectrum, to capture as wide of a variation in effort complementarity as possible. The authors adapt the concept of public randomization equilibrium introduced by \textit{C. Harris} et al. [Econometrica 63, No. 3, 507--544 (1995; Zbl 0839.90147)], assuming that players within each group, but not across groups, could correlate their efforts. It is shown that when group efforts are determined by the best shot, there exists a unique equilibrium under public randomization (up to the permutation of the identity of an active player). The dominant equilibrium has the highest expected total effort among all equilibria, whether non-degenerate or not, however it may not deliver the lowest expected total payoff. Section Appendix presents the details of the theoretical analysis.