In Tullock contests in which the common value of the prize is uncertain and the elasticity of the marginal cost of effort is increasing (decreasing), the effect of changes of players’ information on the equilibrium efforts and payoffs is unambiguous: if information is symmetric, then expected effort decreases (increases) as players become better informed; in two-player contests, the expected effort of a player with information advantage is less (greater) than that of his opponent. Sharper results arise when the cost of effort is linear: Under symmetric information, expected effort and payoff are invariant to changes in the players’ information. In two-player contests, both players exert the same expected effort regardless of their information, although expected effort is smaller when one player has information advantage than when both players have the same information. Interestingly, the expected payoff of a player with information advantage is larger than that of his opponent, even though he wins the prize less frequently.
Bibliographical noteFunding Information:
We are grateful to Angel Hernando, and the editor and referees for helpful comments. Acknowledgments of financial support: Israel Science Foundation, Grant 648/2 (Einy); Ministerio Economía (Spain), Grants ECO2014-55953-P and MDM2014-0431, and Comunidad de Madrid, Grant S2015/HUM-3444 (Moreno).
© 2018, Springer Science+Business Media, LLC, part of Springer Nature.
- Asymmetric information
- Common value
- Tullock contests
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- Developmental and Educational Psychology
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