Repeated contests with asymmetric information

Arbeitspapier

The same contestants often meet repeatedly in contests. Behavior in a contest potentially provides information with regard to one's type and can therefore influence the behavior of the opponents in later contests. This paper shows that if effort is observable, this can induce a ratchet effect in contests: high ability contestants sometimes put in little effort in an early round in order to make the opponents believe that they are of little ability. The effect reduces overall effort and increases equilibrium utility of the contestants when compared with two unrelated one-shot contests. It does, however, also introduce an allocative inefficiency since sometimes a contestant with a low valuation wins. The model assumes an imperfectly discriminating contest. In extension I show that, qualitatively, results are similar in a perfectly discriminating contest (all pay auction).

Object Details

• Alternative title: Wiederholte Wettkämpfe mit asymmetrischer Information
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: WZB Discussion Paper ; No. SP II 2008-08

Classification and Topics

• Classification: Wirtschaft ; Noncooperative Games ; Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior ; Conflict; Conflict Resolution; Alliances; Revolutions ; Asymmetric and Private Information; Mechanism Design ; Personnel Economics: Compensation and Compensation Methods and Their Effects

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Münster, Johannes
• Event: Veröffentlichung
• (who): Wissenschaftszentrum Berlin für Sozialforschung (WZB)
• (where): Berlin
• (when): 2008

Further information

• Handle: http://hdl.handle.net/10419/51156
• Last update: 10.03.2025, 11:44 AM CET