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Information alliances in contests with budget limits

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  • Konrad, Kai A.

Abstract

We study the role of information exchange through alliances in a framework with contestants who have binding budget limits and know their own budget limit but are incompletely informed about other contestants' budget limits. First, we solve for the Bayesian Nash equilibrium. Then we consider the role of information exchange through alliances. Contestants learn the budget limits of all players who are within the same alliance, and then decide independently about their own contest efforts. This type of alliance formation is beneficial for alliance members and neutral for players who do not belong to the alliance. Also, a merger between alliances is beneficial for their members. Further, we consider merger between alliances and discuss the set of stable combinations of alliances.

Suggested Citation

  • Konrad, Kai A., 2010. "Information alliances in contests with budget limits," Discussion Papers, Research Professorship & Project "The Future of Fiscal Federalism" SP II 2010-21, WZB Berlin Social Science Center.
    • Handle: RePEc:zbw:wzbfff:spii201021
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    Cited by:

    1. Konishi, Hideo & Pan, Chen-Yu, 2021. "Endogenous alliances in survival contests," Journal of Economic Behavior & Organization, Elsevier, vol. 189(C), pages 337-358.
    2. Christian Ewerhart & Federico Quartieri, 2020. "Unique equilibrium in contests with incomplete information," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 70(1), pages 243-271, July.
    3. Konrad, Kai A. & Cusack, Thomas R., 2013. "Hanging together or being hung separately: The strategic power of coalitions where bargaining occurs with incomplete information," Discussion Papers, Research Unit: Market Behavior SP II 2013-202, WZB Berlin Social Science Center.
    4. Kai A. Konrad & Florian Morath, 2018. "To Deter Or To Moderate? Alliance Formation In Contests With Incomplete Information," Economic Inquiry, Western Economic Association International, vol. 56(3), pages 1447-1463, July.
    5. Brenton Kenkel, 2019. "The efficacy of cheap talk in collective action problems," Journal of Theoretical Politics, , vol. 31(3), pages 370-402, July.
    6. Hideo Konishi & Chen‐Yu Pan, 2020. "Sequential formation of alliances in survival contests," International Journal of Economic Theory, The International Society for Economic Theory, vol. 16(1), pages 95-105, March.
    7. Raghul S Venkatesh, 2018. "On Information Aggregation in International Alliances," AMSE Working Papers 1855, Aix-Marseille School of Economics, France, revised Jul 2019.

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    More about this item

    Keywords

    Contest; budget limits; incomplete information; alliances; information sharing;
    All these keywords.

    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

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