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Common-value contests with asymmetric information

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  • Wärneryd, Karl

Abstract

We consider two-player, perfectly discriminatory, common-value contests (or all-pay auctions), in which one player knows the value of the contested object with certainty, and the other knows only its prior distribution. We show, among other things, that in equilibrium the players win with equal probability. This contrasts with a large class of imperfectly discriminatory contests in which the uninformed player wins with a strictly greater probability than the informed player.

Suggested Citation

  • Wärneryd, Karl, 2013. "Common-value contests with asymmetric information," Economics Letters, Elsevier, vol. 120(3), pages 525-527.
    • Handle: RePEc:eee:ecolet:v:120:y:2013:i:3:p:525-527
    DOI: 10.1016/j.econlet.2013.06.022
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    References listed on IDEAS

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    Cited by:

    1. Heijnen, Pim & Schoonbeek, Lambert, 2019. "Rent-seeking with uncertain discriminatory power," European Journal of Political Economy, Elsevier, vol. 56(C), pages 103-114.
    2. Wu, Zenan & Zheng, Jie, 2017. "Information sharing in private value lottery contest," Economics Letters, Elsevier, vol. 157(C), pages 36-40.
    3. Alexander Matros & Alex Possajennikov, 2014. "Common Value Allocation Mechanisms with Private Information: Lotteries or Auctions?," Discussion Papers 2014-07, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    4. Ford, Weixing & Lian, Zeng & Lien, Jaimie W. & Zheng, Jie, 2020. "Information sharing in a contest game with group identity," Economics Letters, Elsevier, vol. 189(C).
    5. Lambert Schoonbeek, 2017. "Information And Endogenous Delegation In A Rent-Seeking Contest," Economic Inquiry, Western Economic Association International, vol. 55(3), pages 1497-1510, July.

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    More about this item

    Keywords

    Contest; Asymmetric information; All-pay auction;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process

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