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Endogenous timing of contest with asymmetric information

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  • Qiang Fu

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

Suggested Citation

  • Qiang Fu, 2006. "Endogenous timing of contest with asymmetric information," Public Choice, Springer, vol. 129(1), pages 1-23, October.
    • Handle: RePEc:kap:pubcho:v:129:y:2006:i:1:p:1-23
    DOI: 10.1007/s11127-006-8325-8
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    1. Kreps, David M & Wilson, Robert, 1982. "Sequential Equilibria," Econometrica, Econometric Society, vol. 50(4), pages 863-894, July.
    2. Bernardo, Antonio E & Talley, Eric & Welch, Ivo, 2000. "A Theory of Legal Presumptions," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 16(1), pages 1-49, April.
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    4. Warneryd, Karl, 2003. "Information in conflicts," Journal of Economic Theory, Elsevier, vol. 110(1), pages 121-136, May.
    5. 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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    Citations

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    Cited by:

    1. Karl Wärneryd, 2012. "Multi-player contests with asymmetric information," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 51(2), pages 277-287, October.
    2. Hoffmann, Magnus & Rota-Graziosi, Grégoire, 2012. "Endogenous timing in general rent-seeking and conflict models," Games and Economic Behavior, Elsevier, vol. 75(1), pages 168-184.
    3. Kyung Hwan Baik & Jong Hwa Lee & Seokho Lee, 2022. "Endogenous timing in three-player Tullock contests," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 59(3), pages 495-523, October.
    4. Sherrill Shaffer & Jason Shogren, 2008. "Infinitely repeated contests: How strategic interaction affects the efficiency of governance," Regulation & Governance, John Wiley & Sons, vol. 2(2), pages 234-252, June.
    5. Christian Ewerhart & Federico Quartieri, 2020. "Unique equilibrium in contests with incomplete information," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 70(1), pages 243-271, July.
    6. Baumann, Florian & Denter, Philipp & Friehe, Tim, 2013. "Hide or show? Endogenous observability of private precautions against crime when property value is private information," DICE Discussion Papers 115, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    7. Konstantinos Protopappas, 2023. "Manipulation of moves in sequential contests," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 61(3), pages 511-535, October.
    8. Kyung Hwan Baik & Jong Hwa Lee, 2013. "Endogenous Timing In Contests With Delegation," Economic Inquiry, Western Economic Association International, vol. 51(4), pages 2044-2055, October.
    9. Lian Jian & Zheng Li & Tracy Xiao Liu, 2017. "Simultaneous versus sequential all-pay auctions: an experimental study," Experimental Economics, Springer;Economic Science Association, vol. 20(3), pages 648-669, September.
    10. Fu, Qiang & Gürtler, Oliver & Münster, Johannes, 2013. "Communication and commitment in contests," Journal of Economic Behavior & Organization, Elsevier, vol. 95(C), pages 1-19.
    11. Denter, Philipp & Morgan, John & Sisak, Dana, 2011. ""Where Ignorance is Bliss, 'tis Folly to be Wise": Transparency in Contests," Economics Working Paper Series 1128, University of St. Gallen, School of Economics and Political Science.
    12. Philipp Denter & Dana Sisak, 2015. "The fragility of deterrence in conflicts," Journal of Theoretical Politics, , vol. 27(1), pages 43-57, January.
    13. Florian Baumann & Tim Friehe, 2013. "A note on the timing of investments in litigation contests," European Journal of Law and Economics, Springer, vol. 35(3), pages 313-326, June.
    14. Ella Segev & Aner Sela, 2014. "Sequential all-pay auctions with head starts," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 43(4), pages 893-923, December.

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