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Information acquisition in conflicts

Listed author(s):
  • Florian Morath

    ()

  • Johannes Münster

    ()

This paper considers incentives for information acquisition ahead of conflicts. First, we characterize the (unique) equilibrium of the all-pay auction between two players with one-sided asymmetric information where one player has private information about his valuation. Then, we use our results to study information acquisition prior to an all-pay auction. If the decision to acquire information is observable, but not the information received, one-sided asymmetric information can occur endogenously in equilibrium. Moreover, the cut-off values of the cost of information that determine equilibrium information acquisition are higher than those in the first best. Thus, information acquisition is excessive. In contrast, with open or covert information acquisition, the equilibrium cut-off values are as in the first best. Copyright Springer-Verlag 2013

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File URL: http://hdl.handle.net/10.1007/s00199-012-0710-6
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Article provided by Springer & Society for the Advancement of Economic Theory (SAET) in its journal Economic Theory.

Volume (Year): 54 (2013)
Issue (Month): 1 (September)
Pages: 99-129

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Handle: RePEc:spr:joecth:v:54:y:2013:i:1:p:99-129
DOI: 10.1007/s00199-012-0710-6
Contact details of provider: Web page: http://www.springer.com

Web page: http://saet.uiowa.edu/

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  8. Groh, Christian & Moldovanu, Benny & Sela, Aner & Sunde, Uwe, 2003. "Optimal Seedings in Elimination Tournaments," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 140, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
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  17. Nicola Persico, 1997. "Information Acquisition in Auctions," UCLA Economics Working Papers 762, UCLA Department of Economics.
  18. Clark, Derek J & Riis, Christian, 1998. "Competition over More Than One Prize," American Economic Review, American Economic Association, vol. 88(1), pages 276-289, March.
  19. Arye L. Hillman & John G. Riley, 1987. "Politically Contestable Rents and Transfers," UCLA Economics Working Papers 452, UCLA Department of Economics.
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  21. Alcalde, José & Dahm, Matthias, 2010. "Rent seeking and rent dissipation: A neutrality result," Journal of Public Economics, Elsevier, vol. 94(1-2), pages 1-7, February.
  22. Hernando-Veciana, Ángel, 2009. "Information acquisition in auctions: Sealed bids vs. open bids," Games and Economic Behavior, Elsevier, vol. 65(2), pages 372-405, March.
  23. Morath, Florian & Münster, Johannes, 2008. "Private versus complete information in auctions," Economics Letters, Elsevier, vol. 101(3), pages 214-216, December.
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