IDEAS home Printed from https://ideas.repec.org/p/zur/econwp/279.html
   My bibliography  Save this paper

Voluntary disclosure in asymmetric contests

Author

Listed:
  • Christian Ewerhart
  • Julia Lareida

Abstract

This paper studies the incentives for interim voluntary disclosure of verifiable information in probabilistic all-pay contests. Provided that the contest is uniformly asymmetric, full revelation is the unique perfect Bayesian equilibrium outcome. This is so because the weakest type of the underdog will try to moderate the favorite, while the strongest type of the favorite will try to discourage the underdog─so that the contest unravels. Self-disclosure is optimal even though a weak favorite or strong underdog may be induced to raise their efforts, i.e., show "dominant" or "defiant" reactions. To avert Pareto inferior unraveling, the favorite may prefer to shut down communication, but this is never the case for the underdog. We also consider partial information release, cheap talk, Bayesian persuasion, information design, correlation, and continuous types. Applications are discussed. The proofs employ novel arguments in monotone comparative statics and an improved version of Jensen's inequality.

Suggested Citation

  • Christian Ewerhart & Julia Lareida, 2018. "Voluntary disclosure in asymmetric contests," ECON - Working Papers 279, Department of Economics - University of Zurich, revised Jan 2021.
  • Handle: RePEc:zur:econwp:279
    as

    Download full text from publisher

    File URL: http://www.econ.uzh.ch/static/wp/econwp279.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Fu, Qiang & Gürtler, Oliver & Münster, Johannes, 2013. "Communication and commitment in contests," Journal of Economic Behavior & Organization, Elsevier, vol. 95(C), pages 1-19.
    2. Tullock, Gordon, 1975. "On the Efficient Organization of Trials," Kyklos, Wiley Blackwell, vol. 28(4), pages 745-762.
    3. Masahiro Okuno-Fujiwara & Andrew Postlewaite & Kotaro Suzumura, 1990. "Strategic Information Revelation," Review of Economic Studies, Oxford University Press, vol. 57(1), pages 25-47.
    4. Kreps, David M & Wilson, Robert, 1982. "Sequential Equilibria," Econometrica, Econometric Society, vol. 50(4), pages 863-894, July.
    5. Konrad, Kai A., 2009. "Strategy and Dynamics in Contests," OUP Catalogue, Oxford University Press, number 9780199549603.
    6. 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.
    7. Jun Zhang & Ruqu Wang, 2009. "The Role of Information Revelation in Elimination Contests," Economic Journal, Royal Economic Society, vol. 119(536), pages 613-641, March.
    8. Gil S. Epstein & Yosef Mealem & Shmuel Nitzan, 2013. "Lotteries vs. All-Pay Auctions in Fair and Biased Contests," Economics and Politics, Wiley Blackwell, vol. 25(1), pages 48-60, March.
    9. Slantchev, Branislav L., 2010. "Feigning Weakness," International Organization, Cambridge University Press, vol. 64(3), pages 357-388, July.
    10. Jun Zhang & Junjie Zhou, 2016. "Information Disclosure in Contests: A Bayesian Persuasion Approach," Economic Journal, Royal Economic Society, vol. 126(597), pages 2197-2217, November.
    11. Clark, Derek J, 1997. "Learning the Structure of a Simple Rent-Seeking Game," Public Choice, Springer, vol. 93(1-2), pages 119-130, October.
    12. Qiang Fu & Jingfeng Lu & Jun Zhang, 2016. "Disclosure policy in Tullock contests with asymmetric stochastic entry," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 49(1), pages 52-75, February.
    13. Franke, Jörg & Kanzow, Christian & Leininger, Wolfgang & Schwartz, Alexandra, 2014. "Lottery versus all-pay auction contests: A revenue dominance theorem," Games and Economic Behavior, Elsevier, vol. 83(C), pages 116-126.
    14. Daniel J. Seidmann & Eyal Winter, 1997. "Strategic Information Transmission with Verifiable Messages," Econometrica, Econometric Society, vol. 65(1), pages 163-170, January.
    15. Grossman, Sanford J, 1981. "The Informational Role of Warranties and Private Disclosure about Product Quality," Journal of Law and Economics, University of Chicago Press, vol. 24(3), pages 461-483, December.
    16. Ewerhart, Christian, 2014. "Unique equilibrium in rent-seeking contests with a continuum of types," Economics Letters, Elsevier, vol. 125(1), pages 115-118.
    17. Einy, E. & Haimanko, O. & Moreno, D. & Sela, A. & Shitovitz, B., 2015. "Equilibrium existence in Tullock contests with incomplete information," Journal of Mathematical Economics, Elsevier, vol. 61(C), pages 241-245.
    18. Qiang Fu & Qian Jiao & Jingfeng Lu, 2011. "On disclosure policy in contests with stochastic entry," Public Choice, Springer, vol. 148(3), pages 419-434, September.
    19. Yildirim Mustafa, 2018. "Pre-contest Communication Incentives," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 18(1), pages 1-21, January.
    20. Anderson, Simon P. & Renault, Regis, 2003. "Efficiency and surplus bounds in Cournot competition," Journal of Economic Theory, Elsevier, vol. 113(2), pages 253-264, December.
    21. Giovannoni, Francesco & Seidmann, Daniel J., 2007. "Secrecy, two-sided bias and the value of evidence," Games and Economic Behavior, Elsevier, vol. 59(2), pages 296-315, May.
    22. David A. Malueg & Andrew J. Yates, 2004. "Sent Seeking With Private Values," Public Choice, Springer, vol. 119(1_2), pages 161-178, April.
    23. Van Zandt, Timothy & Vives, Xavier, 2007. "Monotone equilibria in Bayesian games of strategic complementarities," Journal of Economic Theory, Elsevier, vol. 134(1), pages 339-360, May.
    24. Caplin, Andrew & Nalebuff, Barry, 1991. "Aggregation and Social Choice: A Mean Voter Theorem," Econometrica, Econometric Society, vol. 59(1), pages 1-23, January.
    25. Ezra Einy & Diego Moreno & Benyamin Shitovitz, 2017. "The value of public information in common-value Tullock contests," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 63(4), pages 925-942, April.
    26. Wasser, Cédric, 2013. "A note on Bayesian Nash equilibria in imperfectly discriminating contests," Mathematical Social Sciences, Elsevier, vol. 66(2), pages 180-182.
    27. Andrew J. Monaco & Tarun Sabarwal, 2016. "Games with strategic complements and substitutes," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 62(1), pages 65-91, June.
    28. Roger Myerson & Karl Wärneryd, 2006. "Population uncertainty in contests," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 27(2), pages 469-474, January.
    29. Florian Ederer, 2010. "Feedback and Motivation in Dynamic Tournaments," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 19(3), pages 733-769, September.
    30. Jeanne Hagenbach & Frédéric Koessler & Eduardo Perez‐Richet, 2014. "Certifiable Pre‐Play Communication: Full Disclosure," Econometrica, Econometric Society, vol. 82(3), pages 1093-1131, May.
    31. Rosen, Sherwin, 1986. "Prizes and Incentives in Elimination Tournaments," American Economic Review, American Economic Association, vol. 76(4), pages 701-715, September.
    32. Christian Ewerhart, 2014. "Unique equilibrium in rent-seeking contests with a continuum of types," ECON - Working Papers 159, Department of Economics - University of Zurich.
    33. repec:adr:anecst:y:1992:i:25-26 is not listed on IDEAS
    34. Fu, Qiang & Jiao, Qian & Lu, Jingfeng, 2014. "Disclosure policy in a multi-prize all-pay auction with stochastic abilities," Economics Letters, Elsevier, vol. 125(3), pages 376-380.
    35. Parreiras, Sérgio O. & Rubinchik, Anna, 2010. "Contests with three or more heterogeneous agents," Games and Economic Behavior, Elsevier, vol. 68(2), pages 703-715, March.
    36. repec:adr:anecst:y:1992:i:25-26:p:08 is not listed on IDEAS
    37. Feng, Xin & Lu, Jingfeng, 2016. "The optimal disclosure policy in contests with stochastic entry: A Bayesian persuasion perspective," Economics Letters, Elsevier, vol. 147(C), pages 103-107.
    38. P. Milgrom., 2009. "What the Seller Won’t Tell You: Persuasion and Disclosure in Markets," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 3.
    39. Aoyagi, Masaki, 2010. "Information feedback in a dynamic tournament," Games and Economic Behavior, Elsevier, vol. 70(2), pages 242-260, November.
    40. Linster, Bruce G, 1993. "Stackelberg Rent-Seeking," Public Choice, Springer, vol. 77(2), pages 307-321, October.
    41. O'Keeffe, Mary & Viscusi, W Kip & Zeckhauser, Richard J, 1984. "Economic Contests: Comparative Reward Schemes," Journal of Labor Economics, University of Chicago Press, vol. 2(1), pages 27-56, January.
    42. Drugov, Mikhail & Ryvkin, Dmitry, 2017. "Biased contests for symmetric players," Games and Economic Behavior, Elsevier, vol. 103(C), pages 116-144.
    43. Paul R. Milgrom, 1981. "Good News and Bad News: Representation Theorems and Applications," Bell Journal of Economics, The RAND Corporation, vol. 12(2), pages 380-391, Autumn.
    44. Wu, Zenan & Zheng, Jie, 2017. "Information sharing in private value lottery contest," Economics Letters, Elsevier, vol. 157(C), pages 36-40.
    45. Margaret A. Meyer, 1992. "Biased Contests and Moral Hazard: Implications for Career Profiles," Annals of Economics and Statistics, GENES, issue 25-26, pages 165-187.
    46. Lim, Wooyoung & Matros, Alexander, 2009. "Contests with a stochastic number of players," Games and Economic Behavior, Elsevier, vol. 67(2), pages 584-597, November.
    47. Dye, Ra, 1985. "Disclosure Of Nonproprietary Information," Journal of Accounting Research, Wiley Blackwell, vol. 23(1), pages 123-145.
    48. Chen, Bo & Jiang, Xiandeng & Knyazev, Dmitriy, 2017. "On disclosure policies in all-pay auctions with stochastic entry," Journal of Mathematical Economics, Elsevier, vol. 70(C), pages 66-73.
    49. Caplin, Andrew & Nalebuff, Barry, 1991. "Aggregation and Imperfect Competition: On the Existence of Equilibrium," Econometrica, Econometric Society, vol. 59(1), pages 25-59, January.
    50. Mark Fey, 2008. "Rent-seeking contests with incomplete information," Public Choice, Springer, vol. 135(3), pages 225-236, June.
    51. Gil Epstein & Yosef Mealem, 2013. "Who gains from information asymmetry?," Theory and Decision, Springer, vol. 75(3), pages 305-337, September.
    52. Yildirim, Huseyin, 2005. "Contests with multiple rounds," Games and Economic Behavior, Elsevier, vol. 51(1), pages 213-227, April.
    53. Cédric Wasser, 2013. "Incomplete information in rent-seeking contests," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 53(1), pages 239-268, May.
    54. Amann, Erwin & Leininger, Wolfgang, 1996. "Asymmetric All-Pay Auctions with Incomplete Information: The Two-Player Case," Games and Economic Behavior, Elsevier, vol. 14(1), pages 1-18, May.
    55. Pittenger, A. O., 1990. "Sharp mean-variance bounds for Jensen-type inequalities," Statistics & Probability Letters, Elsevier, vol. 10(2), pages 91-94, July.
    56. Lambert Schoonbeek & Barbara Winkel, 2006. "Activity and inactivity in a rent-seeking contest with private information," Public Choice, Springer, vol. 127(1), pages 123-132, April.
    57. Verrecchia, Robert E., 1983. "Discretionary disclosure," Journal of Accounting and Economics, Elsevier, vol. 5(1), pages 179-194, April.
    58. Maria Goltsman & Arijit Mukherjee, 2011. "Interim Performance Feedback in Multistage Tournaments: The Optimality of Partial Disclosure," Journal of Labor Economics, University of Chicago Press, vol. 29(2), pages 229-265.
    59. Dan Kovenock & Florian Morath & Johannes Münster, 2015. "Information Sharing in Contests," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 24(3), pages 570-596, September.
    60. Pim Heijnen & Lambert Schoonbeek, 2017. "Signaling in a Rent-Seeking Contest with One-Sided Asymmetric Information," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 19(2), pages 548-564, April.
    61. Ryvkin, Dmitry, 2010. "Contests with private costs: Beyond two players," European Journal of Political Economy, Elsevier, vol. 26(4), pages 558-567, December.
    62. Dixit, Avinash K, 1987. "Strategic Behavior in Contests," American Economic Review, American Economic Association, vol. 77(5), pages 891-898, December.
    63. Benoit, Jean-Pierre & Dubra, Juan, 2006. "Information revelation in auctions," Games and Economic Behavior, Elsevier, vol. 57(2), pages 181-205, November.
    64. Adriana Gama & David Michael Rietzke, 2017. "Robust Comparative Statics in Contests," Working Papers 173174403, Lancaster University Management School, Economics Department.
    65. Denter, Philipp & Morgan, John & Sisak, Dana, 2011. ""Where Ignorance is Bliss, 'tis Folly to be Wise": Transparency in Contests," Economics Working Paper Series 1128, University of St. Gallen, School of Economics and Political Science.
    66. Kyle Beardsley & Victor Asal, 2009. "Winning with the Bomb," Journal of Conflict Resolution, Peace Science Society (International), vol. 53(2), pages 278-301, April.
    67. Hurley, Terrance M. & Shogren, Jason F., 1998. "Asymmetric information contests," European Journal of Political Economy, Elsevier, vol. 14(4), pages 645-665, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ford, Weixing & Lian, Zeng & Lien, Jaimie W. & Zheng, Jie, 2020. "Information sharing in a contest game with group identity," Economics Letters, Elsevier, vol. 189(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. Marco Serena, 2017. "Harnessing Beliefs to Stimulate Efforts; on the Optimal Disclosure Policy in Contests," Working Papers tax-mpg-rps-2018-11, Max Planck Institute for Tax Law and Public Finance.
    3. Heijnen, Pim & Schoonbeek, Lambert, 2019. "Rent-seeking with uncertain discriminatory power," European Journal of Political Economy, Elsevier, vol. 56(C), pages 103-114.
    4. Jingfeng Lu & Hongkun Ma & Zhe Wang, 2018. "Ranking Disclosure Policies In All‐Pay Auctions," Economic Inquiry, Western Economic Association International, vol. 56(3), pages 1464-1485, July.
    5. Luke Boosey & Philip Brookins & Dmitry Ryvkin, 2020. "Information Disclosure in Contests with Endogenous Entry: An Experiment," Management Science, INFORMS, vol. 66(11), pages 5128-5150, November.
    6. Drugov, Mikhail & Ryvkin, Dmitry, 2017. "Biased contests for symmetric players," Games and Economic Behavior, Elsevier, vol. 103(C), pages 116-144.
    7. Ori Haimanko, 2021. "Bayesian Nash equilibrium existence in (almost continuous) contests," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 71(3), pages 1231-1258, April.
    8. Bhattacharya, Sourav & Goltsman, Maria & Mukherjee, Arijit, 2018. "On the optimality of diverse expert panels in persuasion games," Games and Economic Behavior, Elsevier, vol. 107(C), pages 345-363.
    9. Gallice, Andrea, 2017. "An approximate solution to rent-seeking contests with private information," European Journal of Operational Research, Elsevier, vol. 256(2), pages 673-684.
    10. Barbieri, Stefano & Kovenock, Dan & Malueg, David A. & Topolyan, Iryna, 2019. "Group contests with private information and the “Weakest Link”," Games and Economic Behavior, Elsevier, vol. 118(C), pages 382-411.
    11. Hagenbach, Jeanne & Perez-Richet, Eduardo, 2018. "Communication with evidence in the lab," Games and Economic Behavior, Elsevier, vol. 112(C), pages 139-165.
    12. Philipp Denter & John Morgan & Dana (D.) Sisak, 2018. "Showing Off or Laying Low? The Economics of Psych-outs," Tinbergen Institute Discussion Papers 18-041/VII, Tinbergen Institute.
    13. Mercier, Jean-François, 2018. "Non-deterministic group contest with private information," Mathematical Social Sciences, Elsevier, vol. 95(C), pages 47-53.
    14. Fu, Qiang & Gürtler, Oliver & Münster, Johannes, 2013. "Communication and commitment in contests," Journal of Economic Behavior & Organization, Elsevier, vol. 95(C), pages 1-19.
    15. Tan, Xu, 2016. "Information revelation in auctions with common and private values," Games and Economic Behavior, Elsevier, vol. 97(C), pages 147-165.
    16. Ford, Weixing & Lian, Zeng & Lien, Jaimie W. & Zheng, Jie, 2020. "Information sharing in a contest game with group identity," Economics Letters, Elsevier, vol. 189(C).
    17. Klein, Arnd Heinrich & Schmutzler, Armin, 2017. "Optimal effort incentives in dynamic tournaments," Games and Economic Behavior, Elsevier, vol. 103(C), pages 199-224.
    18. Qiang Fu & Jingfeng Lu & Yue Pan, 2015. "Team Contests with Multiple Pairwise Battles," American Economic Review, American Economic Association, vol. 105(7), pages 2120-2140, July.
    19. Thomas Giebe & Paul Schweinzer, 2015. "Probabilistic procurement auctions," Review of Economic Design, Springer;Society for Economic Design, vol. 19(1), pages 25-46, March.
    20. Chen, Bo, 2020. "Disclosure policies in research contests with stochastic entry," Economics Letters, Elsevier, vol. 191(C).

    More about this item

    Keywords

    Asymmetric contests; incomplete information; disclosure; strategic complements and substitutes; dominance and defiance; Bayesian persuasion; Jensen's inequality;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zur:econwp:279. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/seizhch.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Marita Kieser (email available below). General contact details of provider: https://edirc.repec.org/data/seizhch.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.