Interconnected Contests

Abstract

We study a two-player model of conflict with multiple battlefields -- the novel element is that each of the players has their own network of spillovers so that resources allocated to one battle can be utilized in winning neighboring battles. There exists a unique equilibrium in which the relative probability of a player winning a battle is the product of the ratio of the centrality of the battlefield in the two respective competing networks and the ratio of the relative cost of efforts of the two players. We study the design of networks and characterize networks that maximize total efforts and maximize total utility. Finally, we characterize the equilibrium of a game in which players choose both networks and efforts in the battles.