Consider a symmetric common-value Tullock contest with incomplete information in which the players’ cost of effort is the product of a random variable and a deterministic real function of effort, d. We show that the Arrow–Pratt curvature of d, Rd, determines the effect on equilibrium efforts and payoffs of the increased flexibility/reduced commitment that more information introduces into the contest: If Rd is increasing, then effort decreases (increases) with the level of information when the cost of effort (value) is independent of the state of nature. Moreover, if Rd is increasing (decreasing), then the value of public information is nonnegative (nonpositive).
Bibliographical noteFunding Information:
We are grateful to Dan Kovenock and referees for helpful comments and suggestions. Einy acknowledges financial support of the Israel Science Foundation, Grant 648/13. Moreno acknowledges financial support from the Ministerio Economía y Competitividad (Spain), Grants ECO2014-55953-P and MDM2014-0431, and from the Comunidad de Madrid, Grant S2015/HUM-3444.
© 2016, Springer-Verlag Berlin Heidelberg.
- Common values
- Tullock contests
- Value of public information
ASJC Scopus subject areas
- Economics and Econometrics