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Information acquisition in conflicts
[Informationsbeschaffung in Konflikten]

  • Morath, Florian
  • Münster, Johannes

This paper considers incentives for information acquisition ahead of conflicts. We characterize the (unique) equilibrium of the all-pay auction between two players with one-sided asymmetric information. The type of one player is common knowledge. The type of the other player is drawn from a continuous distribution and is private information of this player. We then use our results to study information acquisition prior to an all-pay auction. Depending on the cost of information, only one player may invest in information. If the decision to acquire information is observable for the opponent, but not the information received, one-sided asymmetric information can occur endogenously in equilibrium. Moreover, compared with the first best, information acquisition is excessive. In contrast, with open or covert information acquisition, the cut-off values for equilibrium information acquisition are as in the first best.

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Paper provided by Social Science Research Center Berlin (WZB) in its series Discussion Papers, Research Unit: Market Processes and Governance with number SP II 2009-10.

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Date of creation: 2009
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Handle: RePEc:zbw:wzbmpg:spii200910
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