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Two-Stage Contests with Private Information

Author

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  • Greg Kubitz

Abstract

In perfectly discriminating contests with private information, low-ability contestants prefer to appear strong, while high-ability contestants prefer to appear weak. In a two-stage contest, this leads to a unique symmetric equilibrium with partial pooling in the first stage. A higher output in the first contest leads to a weakly higher belief about the contestant's ability entering the second contest. We characterize this unique equilibrium when cost of effort is linear and show how the prize allocation and type distribution impact contestants' expected output, payoffs, and the probability of surprise victories.

Suggested Citation

  • Greg Kubitz, 2023. "Two-Stage Contests with Private Information," American Economic Journal: Microeconomics, American Economic Association, vol. 15(1), pages 239-287, February.
    • Handle: RePEc:aea:aejmic:v:15:y:2023:i:1:p:239-87
    DOI: 10.1257/mic.20200071
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    More about this item

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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