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Contests with an unknown number of contestants

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  • Johannes Münster

Abstract

This paper studies rent-seeking contests where the contestants do not know the number of actively competing contestants. Two models are compared. In the first, all players are risk neutral; in the second, all have constant absolute risk aversion. If the expected fraction of active contestants is low, an increase in the number of potential contestants increases individual rent-seeking efforts. This effect is in contrast to the complete information case where individual rent-seeking efforts decrease in the number of contestants. The effect is more likely under risk neutrality, but also possible under risk aversion. Equilibrium rent seeking efforts are lower under risk aversion if and only if the expected fraction of active contestants is low. Copyright Springer Science+Business Media, B.V. 2006

Suggested Citation

  • Johannes Münster, 2006. "Contests with an unknown number of contestants," Public Choice, Springer, vol. 129(3), pages 353-368, December.
    • Handle: RePEc:kap:pubcho:v:129:y:2006:i:3:p:353-368
    DOI: 10.1007/s11127-006-9035-y
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    Cited by:

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    3. Alexander Matros, 2007. "Contests with a Stochastic Number of Players," Working Paper 323, Department of Economics, University of Pittsburgh, revised Sep 2008.
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    5. XiaoGang Che & Brad Humphreys, 2014. "Contests with a Prize Externality and Stochastic Entry," Working Papers 14-19, Department of Economics, West Virginia University.
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    8. Münster, Johannes, 2008. "Repeated contests with asymmetric information [Wiederholte Wettkämpfe mit asymmetrischer Information]," Discussion Papers, Research Unit: Market Processes and Governance SP II 2008-08, WZB Berlin Social Science Center.

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    More about this item

    Keywords

    Contest; Rent-seeking; Number uncertainty; Risk aversion;
    All these keywords.

    JEL classification:

    • 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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