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Abstract

We consider a two-player contest for a prize of common but uncertain value. We show that less resources are spent in equilibrium if one party is privately informed about the value of the prize than if either both agents are informed or neither agent is informed. Furthermore, the uninformed agent is ex ante strictly more likely to win the prize than is the informed agent.

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File URL: http://www.sciencedirect.com/science/article/B6WJ3-48HXVV6-1/2/424cfed4aabd2609ef7aaa38a8776b07
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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 110 (2003)
Issue (Month): 1 (May)
Pages: 121-136

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Handle: RePEc:eee:jetheo:v:110:y:2003:i:1:p:121-136

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Web page: http://www.elsevier.com/locate/inca/622869

Related research

Keywords:

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Find related papers by JEL classification:

• C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
• D44 - Microeconomics - - Market Structure and Pricing - - - 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

References

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

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1. Tullock, Gordon, 1975. "On the Efficient Organization of Trials," Kyklos, Wiley Blackwell, vol. 28(4), pages 745-62.
2. Arye L. Hillman & John G. Riley, 1989. "Politically Contestable Rents And Transfers," Economics and Politics, Wiley Blackwell, vol. 1(1), pages 17-39, 03.
   
   • Arye L. Hillman & John G. Riley, 1987. "Politically Contestable Rents and Transfers," UCLA Economics Working Papers 452, UCLA Department of Economics.
3. Eliakim Katz & Jacob Rosenberg, 1989. "Rent-seeking for budgetary allocation: Preliminary results for 20 countries," Public Choice, Springer, vol. 60(2), pages 133-144, February.
4. Szidarovszky, Ferenc & Okuguchi, Koji, 1997. "On the Existence and Uniqueness of Pure Nash Equilibrium in Rent-Seeking Games," Games and Economic Behavior, Elsevier, vol. 18(1), pages 135-140, January.
5. Warneryd, Karl, 1998. "Distributional conflict and jurisdictional organization," Journal of Public Economics, Elsevier, vol. 69(3), pages 435-450, September.
   
   • Wärneryd, Karl, 1997. "Distributional Conflict and Jurisdictional Organization," Working Paper Series in Economics and Finance 173, Stockholm School of Economics.
6. Hurley, Terrance M. & Shogren, Jason F., 1998. "Effort levels in a Cournot Nash contest with asymmetric information," Journal of Public Economics, Elsevier, vol. 69(2), pages 195-210, June.
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8. Harstad, Ronald M, 1995. " Privately Informed Seekers of an Uncertain Rent," Public Choice, Springer, vol. 83(1-2), pages 81-93, April.
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   • Paul Milgrom & Robert J. Weber, 1981. "The Value of Information in a Sealed-Bid Auction," Discussion Papers 462, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
10. Skaperdas, Stergios, 1996. "Contest Success Functions," Economic Theory, Springer, vol. 7(2), pages 283-90, February.
    
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11. Vijay Krishna & John Morgan, 1994. "An Analysis of the War of Attrition and the All-Pay Auction," Game Theory and Information 9409002, EconWPA.
    
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12. Skaperdas, Stergios & Gan, Li, 1995. "Risk Aversion in Contests," Economic Journal, Royal Economic Society, vol. 105(431), pages 951-62, July.
13. Nitzan, Shmuel, 1991. "Collective Rent Dissipation," Economic Journal, Royal Economic Society, vol. 101(409), pages 1522-34, November.
14. Richard L. Fullerton & R. Preston McAfee, 1999. "Auctioning Entry into Tournaments," Journal of Political Economy, University of Chicago Press, vol. 107(3), pages 573-605, June.
15. Linster, Bruce G, 1993. " Stackelberg Rent-Seeking," Public Choice, Springer, vol. 77(2), pages 307-21, October.
16. Laband, David N & Sophocleus, John P, 1992. "An Estimate of Resource Expenditures on Transfer Activity in the United States," The Quarterly Journal of Economics, MIT Press, vol. 107(3), pages 959-83, August.
17. Dixit, Avinash K, 1987. "Strategic Behavior in Contests," American Economic Review, American Economic Association, vol. 77(5), pages 891-98, December.

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Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

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Cited by:

1. Baik, Kyung Hwan & Lee, Sanghack, 2007. "Collective rent seeking when sharing rules are private information," European Journal of Political Economy, Elsevier, vol. 23(3), pages 768-776, September.
2. Qiang Fu, 2006. "Endogenous timing of contest with asymmetric information," Public Choice, Springer, vol. 129(1), pages 1-23, October.
3. J. Atsu Amegashie & Edward Kutsoati, 2005. "(Non)Intervention In Intra-State Conflicts," Working Papers 0504, University of Guelph, Department of Economics.
   
   • Amegashie, J. Atsu & Kutsoati, Edward, 2007. "(Non)intervention in intra-state conflicts," European Journal of Political Economy, Elsevier, vol. 23(3), pages 754-767, September.
4. Thomas Giebe & Paul Schweinzer, 2012. "Fuzzy Price-Quality Ratio Procurement under Incomplete Information," Discussion Papers 12/26, Department of Economics, University of York.
5. Philipp Denter & Dana Sisak, 2010. ""Who's the thief?": Asymmetric Information and the Creation of Property Rights," University of St. Gallen Department of Economics working paper series 2010 2010-27, Department of Economics, University of St. Gallen.
6. Lambert Schoonbeek & Barbara Winkel, 2006. "Activity and inactivity in a rent-seeking contest with private information," Public Choice, Springer, vol. 127(1), pages 123-132, April.
7. Garfinkel, Michelle R. & Skaperdas, Stergios, 2007. "Economics of Conflict: An Overview," Handbook of Defense Economics, Elsevier.
   
   • Michelle R. Garfinkel & Stergios Skaperdas, 2006. "Economics of Conflict: An Overview," Working Papers 050623, University of California-Irvine, Department of Economics, revised Sep 2006.
8. Treich, Nicolas, 2010. "Risk-Aversion and Prudence in Rent-Seeking Games," Open Access publications from University of Toulouse 1 Capitole http://neeo.univ-tlse1.fr, University of Toulouse 1 Capitole.
   
   • Nicolas Treich, 2010. "Risk-aversion and prudence in rent-seeking games," Public Choice, Springer, vol. 145(3), pages 339-349, December.
   • TREICH Nicolas, 2009. "Risk-aversion and Prudence in Rent-seeking Games," LERNA Working Papers 09.05.281, LERNA, University of Toulouse.
   • Treich, Nicolas, 2009. "Risk-Aversion and Prudence in Rent-Seeking Games," TSE Working Papers 09-013, Toulouse School of Economics (TSE).
9. Morath, Florian & Münster, Johannes, 2008. "Private versus complete information in auctions," Economics Letters, Elsevier, vol. 101(3), pages 214-216, December.
10. Mark Fey, 2008. "Rent-seeking contests with incomplete information," Public Choice, Springer, vol. 135(3), pages 225-236, June.
11. Gil S. Epstein & Yosef Mealem, 2013. "Who Gains from Information Asymmetry?," Working Papers 2013-01, Department of Economics, Bar-Ilan University.
12. Johannes Münster, 2006. "Contests with an unknown number of contestants," Public Choice, Springer, vol. 129(3), pages 353-368, December.
13. Ryvkin, Dmitry, 2010. "Contests with private costs: Beyond two players," European Journal of Political Economy, Elsevier, vol. 26(4), pages 558-567, December.
14. Gil Epstein & Igal Milchtaich & Shmuel Nitzan & Mordechai Schwarz, 2007. "Ambiguous political power and contest efforts," Public Choice, Springer, vol. 132(1), pages 113-123, July.
15. J. Atsu Amegashie, 2005. "Signaling In A Dynamic Contest With Boundedly Rational Players," Working Papers 0510, University of Guelph, Department of Economics.

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