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Signaling in dynamic contests with heterogeneous rivals

Author

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  • Catepillán, Jorge
  • Figueroa, Nicolás
  • Lemus, Jorge

Abstract

We study signaling in dynamic contests where a privately informed challenger faces multiple rivals. When the challenger can choose between simultaneous and sequential contests, the optimal choice hinges on the degree of player heterogeneity. This is because the strength of future opponents affects the incentive to signal, whereas the strength of current opponents affects the extent and cost of signaling. We show that against homogeneous rivals, the challenger may prefer to reveal information through sequential contests. However, against heterogeneous opponents, the challenger prefers simultaneous contests to avoid information revelation. Additionally, in sequential contests with heterogeneous rivals, we characterize the equilibrium choice of rivals’ order (e.g., weak first and strong second) and show that only pooling and partial-pooling equilibria emerge.

Suggested Citation

  • Catepillán, Jorge & Figueroa, Nicolás & Lemus, Jorge, 2025. "Signaling in dynamic contests with heterogeneous rivals," Journal of Mathematical Economics, Elsevier, vol. 116(C).
    • Handle: RePEc:eee:mateco:v:116:y:2025:i:c:s030440682400140x
    DOI: 10.1016/j.jmateco.2024.103080
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    References listed on IDEAS

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    More about this item

    Keywords

    Contests; Signaling; Learning; Dynamic games;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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