Combining Balassa–Samuelson effects with strategic complementarities between prices of tradables and non-tradables yields a novel determinant of tradables’ prices. A larger productivity difference between tradables and non-tradables raises the non-tradables’ price. With strategic...

We consider a two-player all-pay auction with symmetric independent private values that are uniformly distributed. The designer chooses the size of a head start that is given to one of the players. The designer’s objective is to maximize a convex combination of the expected highest effort and...

We consider preference evolution in a class of conflict models with finite populations. We show that whereas aggregate conflict effort is always the same in evolutionary equilibrium, larger populations have greater individual subjective costs of conflict effort.

A standard tournament contract specifies only tournament prizes. If agents’ performance is measured on a cardinal scale, the principal can complement the tournament contract by a gap which defines the minimum distance by which the best performing agent must beat the second best to receive the...

We consider two-player, perfectly discriminatory, common-value contests (or all-pay auctions), in which one player knows the value of the contested object with certainty, and the other knows only its prior distribution. We show, among other things, that in equilibrium the players win with equal...

We apply an indirect evolutionary approach to players’ perceived prize valuations in contests. Evolution in finite populations leads to preferences that overstate the prize’s material value and induce overexpenditure. We establish an equivalence between evolutionarily stable strategies and...