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Information acquisition in conflicts

  • 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
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