Shanglyu Deng | 邓尚律

We study dynamic multi-battle contests and examine how the contest structure shapes dynamic incentives and determines the extent of rent dissipation. A discouragement effect often arises—such as in tug-of-war and best-of-K contests—preventing full rent dissipation even when the series can extend infinitely. We identify a structural property, exchangeability, that contributes to the effect. Leveraging this insight, we establish a necessary and sufficient condition for almost-full rent dissipation. As an application, we introduce the iterated incumbency contest, which illustrates how volatility in the surrounding environment sustains dynamic incentives and generates almost-full rent dissipation, and thus offers insights into various competitive phenomena.

Existing models of dynamic competition assume that buyers are price-takers, even though prices are negotiated in many industries motivating this literature. We extend a well-known duopoly model to allow for Nash-in-Nash bargaining, with seller price-setting nested as a special case. We illustrate how market structure, dynamic incentives, welfare and the existence of multiple equilibria change with the allocation of bargaining power. We extend the model to allow for forward-looking buyers and more sellers, and to illustrate how the allocation affects optimal subsidy policies and the effects of horizontal mergers, exclusive contracts and policies designed to limit dominance.

We propose a network-based merger screening statistic to assess the competitive effects of acquisitions. We micro-found this measure in a standard differentiated oligopoly model where diversion ratios capture competitive links across products and equilibrium markups decompose into monopolistic and network centrality components. The centrality term summarizes the intensity of competition by capturing product proximity in the characteristic space and determines the unilateral effects of horizontal mergers. Using price and quantity data from the European automobile industry, we find that the network model matches substitution patterns and simulated merger effects from a random coefficients nested logit benchmark. Centrality based screening improves on the 2023 concentration-based presumption and performs comparably to consumer optimal ∆HHI thresholds.

Two ex ante identical players compete for a prize of a common, but initially unknown, value. A designer decides whether and how to disclose an informative signal of the prize’s value to players and sets the scoring rule. A fully symmetric contest—with symmetrically disclosed information and a neutral scoring rule—maximizes the expected total effort. However, a tilting-and-releveling contest may maximize the expected winner’s effort by distorting the contest in both dimensions to create dual asymmetry—i.e., by disclosing the signal privately to one player while biasing the scoring rule in favor of the other.

Large-scale infrastructure projects often involve multiple component tasks and require a range of skills. When procuring such projects, an auctioneer can either organize a combinatorial auction—which allows a firm to bid on the entire project or on individual components as independent entities—or require holistic proposals, whereby specialized firms form consortia to pool their expertise and bid jointly. This paper compares the performance of these two auction formats. In the absence of information frictions, a holistic procurement auction outperforms a combinatorial auction and achieves full allocative efficiency at lower procurement prices. However, information frictions lead to non-assortative matching of firms or strategic behavior within consortia, which may cause the holistic procurement to underperform the combinatorial auction in terms of allocative efficiency and procurement price.

Recurring auctions are ubiquitous for selling durable assets such as artwork and homes, with follow-up auctions held for unsold items. We investigate such auctions theoretically and empirically. Theoretical analysis demonstrates that recurring auctions outperform single-round auctions when buyers face entry costs, enhancing efficiency and revenue due to sorted entry of potential buyers. Optimal reserve price sequences are characterized. Empirical findings from home foreclosure auctions in China reveal significant annual gains in efficiency (3.40 billion USD, 16.60%) and revenue (2.97 billion USD, 15.92%) using recurring auctions compared with single-round auctions. Implementing optimal reserve prices can further improve efficiency (3.35%) and revenue (3.06%).

This paper provides a general study of a contest modeled as a multiplayer incomplete-information, all-pay auction with sequential entry. The contest consists of multiple periods. Players arrive and exert efforts sequentially to compete for a prize. They observe the efforts made by their earlier opponents, but not those of their contemporaneous or future rivals. We establish the existence and uniqueness of a symmetric perfect Bayesian equilibrium (PBE) and fully characterize the equilibrium. Based on the equilibrium result, we show that a later mover always secures a larger ex ante expected payoff. Further, we endogenize the timing of moves and show that all players choose to move in the last period in the unique equilibrium that survives iterated elimination of strictly dominated strategies (IESDS).

A speculator can take advantage of a procurement auction by acquiring items for sale before the auction. The accumulated market power can then be exercised in the auction and may lead to a large enough gain to cover the acquisition costs. I show that speculation always generates a positive expected profit in second-price auctions but could be unprofitable in first-price auctions. In the case where speculation is profitable in first-price auctions, it is more profitable in second-price auctions. This comparison in profitability is driven by different competition patterns in the two auction mechanisms: in first-price auctions, sellers who refuse to sell to the speculator bid more aggressively than in second-price auctions. In terms of welfare, speculation causes private value destruction and harms efficiency. Sellers benefit from the acquisition offer made by the speculator. Therefore, speculation comes at the expense of the auctioneer.

An incumbent employee competes against a new hire for bonuses or promotions. The incumbent’s perception of the new hire’s ability distribution is biased. This bias can result in overconfidence or underconfidence. We show that debiasing may be counterproductive in incentivizing efforts. We then explore whether a firm that values employees’ efforts should disclose an informative signal about the new hire’s type and we characterize the conditions under which transparency or opacity is optimal for the firm. We further consider four extensions to the model. Our results contribute to the extensive discussion of confidence management and organizational transparency in firms.

This paper examines optimally biased Tullock contests. We consider a multi-player Tullock contest in which players differ in their prize valuations. The designer is allowed to impose identity-dependent treatments – i.e., multiplicative biases – to vary their relative competitiveness. The literature has been limited, because a closed-form solution to the equilibrium is in general unavailable when the number of contestants exceeds two, which nullifies the usual implicit programming approach. We develop an algorithmic technique adapted from the general approach of Fu and Wu (2020) and obtain a closed-form solution to the optimum that addresses a broad array of design objectives. We further analyze a resource allocation problem in a research tournament and adapt Fu and Wu’s (2020) approach to this noncanonical setting. Our analysis paves the way for future research in this vein.

We investigate the incentive consequences of introducing the possibility of draws into lottery contests. Equilibrium total effort unambiguously decreases when draws are introduced, whereas the equilibrium expected winner’s effort increases when the contestants’ valuations of the prize become sufficiently dispersed.