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Endogenous timing of contest with asymmetric information

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Author Info
Qiang Fu ()

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Abstract

Simultaneous moves have been conventionally assumed in modeling rent-seeking competition. However, in reality many forms of contests involve contestants sequentially choosing their effort entries. This study allows agents to choose the timing of their moves before the contest takes place. In contrast to the previous literature, we introduce information asymmetries across agents. We find that in all sequential-move equilibria, the uninformed agent moves first. More generally we show that the order of agents’ moves in a sequential contest is a regularity stemming from information asymmetries. Furthermore, under plausible assumptions, sequential moves Pareto dominate simultaneous moves (from the view point of the players) and also result in lower rent-seeking expenditures. Our result explains the timing pattern in National Presidential Conventions observed from 1948 through 2004. Our result also applies to many other formal or informal institutions, which give rise to sequential contests. Copyright Springer Science + Business Media B.V. 2006

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File URL: http://hdl.handle.net/10.1007/s11127-006-8325-8
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Publisher Info
Article provided by Springer in its journal Public Choice.

Volume (Year): 129 (2006)
Issue (Month): 1 (October)
Pages: 1-23
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:kap:pubcho:v:129:y:2006:i:1:p:1-23

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

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Related research
Keywords: Rent-Seeking; Contests; Timing; Information asymmetry;

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References listed on IDEAS
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.:
  1. Morgan, John, 2003. " Sequential Contests," Public Choice, Springer, vol. 116(1-2), pages 1-18, July. [Downloadable!] (restricted)
  2. Skaperdas, Stergios, 1996. "Contest Success Functions," Economic Theory, Springer, vol. 7(2), pages 283-90, February.
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  3. Warneryd, Karl, 2003. "Information in conflicts," Journal of Economic Theory, Elsevier, vol. 110(1), pages 121-136, May. [Downloadable!] (restricted)
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  4. 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. [Downloadable!] (restricted)
  5. Bernardo, Antonio E & Talley, Eric & Welch, Ivo, 2000. "A Theory of Legal Presumptions," Journal of Law, Economics and Organization, Oxford University Press, vol. 16(1), pages 1-49, April.
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  6. Kreps, David M & Wilson, Robert, 1982. "Sequential Equilibria," Econometrica, Econometric Society, vol. 50(4), pages 863-94, July. [Downloadable!] (restricted)
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