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Repeated contests with asymmetric information

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  • Münster, Johannes
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    Abstract

    The same contestants often meet repeatedly in contests. Behavior in a contest potentially provides information with regard to one's type and can therefore influence the behavior of the opponents in later contests. This paper shows that if effort is observable, this can induce a ratchet effect in contests: high ability contestants sometimes put in little effort in an early round in order to make the opponents believe that they are of little ability. The effect reduces overall effort and increases equilibrium utility of the contestants when compared with two unrelated one-shot contests. It does, however, also introduce an allocative inefficiency since sometimes a contestant with a low valuation wins. The model assumes an imperfectly discriminating contest. In extension I show that, qualitatively, results are similar in a perfectly discriminating contest (all pay auction). -- Dieselben Wettkämpfer treffen oft wiederholt in Wettkämpfen aufeinander. Aus dem Verhalten in einem Wettkampf können die Gegner Informationen über den Typ eines Wettkämpfers erhalten: seine Fähigkeit und Motivation zu gewinnen. Auf diesem Weg kann das Verhalten einen Einfluss auf das Verhalten der Gegenspieler in späteren Wettkämpfen haben. Dieser Aufsatz zeigt, dass dies zu einem Sperrklinken Effekt in wiederholten Wettkämpfen führen kann. Die Beteiligten strengen sich in einer frühen Runde manchmal nicht sehr an, um ihre Gegenspieler glauben zu lassen, dass sie nicht sehr an einem Gewinn interessiert sind, und so eine spätere Runde einfach gewinnen zu können. Dieser Effekt verringert die gesamte Leistung in dem Wettkampf. Er führt darüber hinaus zu einer allokativen Ineffizienz, da manchmal ein Spieler gewinnt, dem dies nicht viel Wert ist.

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    Bibliographic Info

    Paper provided by Social Science Research Center Berlin (WZB) in its series Discussion Papers, Research Unit: Market Processes and Governance with number SP II 2008-08.

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    Date of creation: 2008
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    Handle: RePEc:zbw:wzbmpg:spii200808

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