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Sent Seeking With Private Values

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  • David A. Malueg

    ()

  • Andrew J. Yates

    ()

Abstract

We study a rent-seeking contest in which the players' valuations of the prize are private information. We determine a Bayesian equilibrium and give conditions under which the equilibrium exists. Although players are ex ante symmetric, increased possibilities for ex post lopsidedness lead to less aggressive bidding. (Lopsidedness increases as players' values become less positively correlated or as the variation in possible values increases.) We also compare the private-information contest to a related public-information contest in which the realizations of values are common knowledge. The contests are equally efficient and players are indifferent between the two, but risk-averse sellers of the prize are not.

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Bibliographic Info

Article provided by Springer in its journal Public Choice.

Volume (Year): 119 (2004)
Issue (Month): 1_2 (04)
Pages: 161-178

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Handle: RePEc:kap:pubcho:v:119:y:2004:i:1_2:p:161-178

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Web page: http://www.springerlink.com/link.asp?id=100332

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Citations

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Cited by:
  1. Gil Epstein & Yosef Mealem, 2013. "Who gains from information asymmetry?," Theory and Decision, Springer, vol. 75(3), pages 305-337, September.
  2. 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.
  3. Ian A. MacKenzie, 2009. "Controlling externalities in the presence of rent seeking," CER-ETH Economics working paper series 09/111, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
  4. Yong Sui, 2009. "Rent-seeking contests with private values and resale," Public Choice, Springer, vol. 138(3), pages 409-422, March.
  5. Münster, Johannes, 2008. "Repeated contests with asymmetric information," Discussion Papers, Research Unit: Market Processes and Governance SP II 2008-08, Social Science Research Center Berlin (WZB).
  6. Osório Costa, Antonio Miguel, 2010. "Signaling in Dynamic Contests: Some Impossibility Results," Working Papers 2072/151621, Universitat Rovira i Virgili, Department of Economics.
  7. Jun Zhang, 2008. "Simultaneous Signaling in Elimination Contests," Working Papers 1184, Queen's University, Department of Economics.
  8. Gürtler, Oliver, 2006. "Contractual Incentive Provision and Commitment in Rent-Seeking Contests," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 100, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  9. Konrad, Kai A., 2007. "Strategy in contests: an introduction," Discussion Papers, Research Unit: Market Processes and Governance SP II 2007-01, Social Science Research Center Berlin (WZB).
  10. Andrew Yates, 2011. "Winner-pay contests," Public Choice, Springer, vol. 147(1), pages 93-106, April.
  11. 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.
  12. Lim, Wooyoung & Matros, Alexander, 2009. "Contests with a stochastic number of players," Games and Economic Behavior, Elsevier, vol. 67(2), pages 584-597, November.
  13. Dmitry Ryvkin, 2007. "Tullock contests of weakly heterogeneous players," Public Choice, Springer, vol. 132(1), pages 49-64, July.
  14. Thomas Giebe & Paul Schweinzer, 2013. "Probabilistic Procurement Auctions," CESifo Working Paper Series 4320, CESifo Group Munich.
  15. Johannes Münster, 2006. "Contests with an unknown number of contestants," Public Choice, Springer, vol. 129(3), pages 353-368, December.
  16. Christian Ewerhart, 2010. "Rent-seeking contests with independent private values," IEW - Working Papers 490, Institute for Empirical Research in Economics - University of Zurich.
  17. Andrea Gallice, 2013. "Rent-seeking contests with private values and common knowledge about the mean," Working papers 023, Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino.
  18. Malueg, David A. & Yates, Andrew J., 2005. "Equilibria and comparative statics in two-player contests," European Journal of Political Economy, Elsevier, vol. 21(3), pages 738-752, September.
  19. Mark Fey, 2008. "Rent-seeking contests with incomplete information," Public Choice, Springer, vol. 135(3), pages 225-236, June.
  20. Thomas Giebe & Paul Schweinzer, 2012. "Fuzzy Price-Quality Ratio Procurement under Incomplete Information," Discussion Papers 12/26, Department of Economics, University of York.

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