Gambling in contests with heterogeneous loss constraints

- I study an asymmetric stochastic contest model.
- Players differ in their ability to make debt.
- The unique equilibrium outcome and payoffs are characterized in closed form.
- A higher debt level of a player changes the bankruptcy risk of both players.
- The similarity of the equilibrium to other contest models is explored.

I study the impact of asymmetric loss constraints on risk-taking behavior in the contest model of Seel and Strack (2013). I derive the unique Nash equilibrium outcome, the equilibrium payoffs and comparative statics about the bankruptcy risk.