Publication: Information in Tullock contests
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2019-05-01
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Springer
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Abstract
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.
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Keywords
Asymmetric information, Common value, Tullock contests
Bibliographic citation
Aiche, A., Einy, E., Haimanko, O., Moreno, D., Sela, A., & Shitovitz, B. (2018). Information in Tullock contests. Theory and Decision, 86 (3-4), pp. 303-323.