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Information acquisition in conflicts

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  • Florian Morath

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  • Johannes Münster

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Abstract

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

Suggested Citation

  • Florian Morath & Johannes Münster, 2013. "Information acquisition in conflicts," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 54(1), pages 99-129, September.
  • Handle: RePEc:spr:joecth:v:54:y:2013:i:1:p:99-129 DOI: 10.1007/s00199-012-0710-6
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Cédric Wasser, 2013. "Incomplete information in rent-seeking contests," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), pages 239-268.
    2. Qiang Fu & Jingfeng Lu & Yue Pan, 2015. "Team Contests with Multiple Pairwise Battles," American Economic Review, American Economic Association, pages 2120-2140.
    3. repec:spr:joecth:v:63:y:2017:i:4:d:10.1007_s00199-016-0974-3 is not listed on IDEAS
    4. Tri Vi Dang & Florian Morath, 2013. "The Taxation of Bilateral Trade with Endogenous Information," Working Papers tax-mpg-rps-2013-07, Max Planck Institute for Tax Law and Public Finance.
    5. repec:zbw:rwirep:0544 is not listed on IDEAS
    6. Lars P. Metzger, 2015. "Alliance Formation in Contests with Incomplete Information," Ruhr Economic Papers 0544, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    7. Metzger, Lars P., 2015. "Alliance Formation in Contests with Incomplete Information," Ruhr Economic Papers 544, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    8. Seel, Christian, 2014. "The value of information in asymmetric all-pay auctions," Games and Economic Behavior, Elsevier, vol. 86(C), pages 330-338.
    9. Kai A. Konrad & Florian Morath, 2015. "To deter or to moderate? Alliance formation in contests with incomplete information," Working Papers tax-mpg-rps-2015-15, Max Planck Institute for Tax Law and Public Finance.
    10. repec:eee:gamebe:v:104:y:2017:i:c:p:372-391 is not listed on IDEAS

    More about this item

    Keywords

    All-pay auctions; Conflicts; Contests; Information acquisition; Asymmetric information; D72; D74; D82; D83;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • 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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