IDEAS home Printed from https://ideas.repec.org/p/ube/dpvwib/dp2017.html
   My bibliography  Save this paper

Fighting for Lemons: The Encouragement Effect in Dynamic Contests with Private Information

Author

Listed:
  • Juan Beccuti
  • Marc M ller

Abstract

This paper proposes a tractable model of a dynamic contest where players have private information about the contest s prize. We show that private information helps to encourage players who have fallen behind, leading to an increase in aggre- gate incentives. We derive the optimal information design for a designer interested in the maximization of aggregate effort. Optimal signals turn out to be private and imperfectly informative and aim to level the playing field at any stage of the dynamic interaction.

Suggested Citation

  • Juan Beccuti & Marc M ller, 2020. "Fighting for Lemons: The Encouragement Effect in Dynamic Contests with Private Information," Diskussionsschriften dp2017, Universitaet Bern, Departement Volkswirtschaft.
    • Handle: RePEc:ube:dpvwib:dp2017
    as

    Download full text from publisher

    File URL: https://repec.vwiit.ch/dp/dp2017.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. 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.
    2. Dmitry Ryvkin, 2011. "Fatigue in Dynamic Tournaments," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 20(4), pages 1011-1041, December.
    3. Aner Sela & Oz Tsahi, 2020. "On the optimal allocation of prizes in best-of-three all-pay auctions," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 55(2), pages 255-273, August.
    4. A. Aiche & E. Einy & O. Haimanko & D. Moreno & A. Sela & B. Shitovitz, 2019. "Information in Tullock contests," Theory and Decision, Springer, vol. 86(3), pages 303-323, May.
    5. Dubey, Pradeep, 2013. "The role of information in contests," Economics Letters, Elsevier, vol. 120(2), pages 160-163.
    6. Dawei Fang & Thomas Noe & Philipp Strack, 2020. "Turning Up the Heat: The Discouraging Effect of Competition in Contests," Journal of Political Economy, University of Chicago Press, vol. 128(5), pages 1940-1975.
    Full references (including those not matched with items on IDEAS)

    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. Aner Sela, 2021. "Resource Allocations In Multi-Stage Contests," Working Papers 2105, Ben-Gurion University of the Negev, Department of Economics.
    2. Aner Sela, 2023. "Resource allocations in the best-of-k ( $$k=2,3$$ k = 2 , 3 ) contests," Journal of Economics, Springer, vol. 139(3), pages 235-260, August.
    3. Arne Lauber & Christoph March & Marco Sahm, 2022. "Optimal and Fair Prizing in Sequential Round-Robin Tournaments: Experimental Evidence," CESifo Working Paper Series 9651, CESifo.
    4. Marco Serena, 2022. "Harnessing beliefs to optimally disclose contestants’ types," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 74(3), pages 763-792, October.
    5. Aner Sela, 2022. "Ineffective Prizes In Multi-Dimensional Contests," Working Papers 2205, Ben-Gurion University of the Negev, Department of Economics.
    6. Fu, Qiang & Wu, Zenan & Zhu, Yuxuan, 2022. "On equilibrium existence in generalized multi-prize nested lottery contests," Journal of Economic Theory, Elsevier, vol. 200(C).
    7. Alejandro Melo Ponce, 2018. "The Secret Behind The Tortoise and the Hare: Information Design in Contests," 2018 Papers pme809, Job Market Papers.
    8. Lauber, Arne & March, Christoph & Sahm, Marco, 2023. "Optimal and fair prizing in sequential round-robin tournaments: Experimental evidence," Games and Economic Behavior, Elsevier, vol. 141(C), pages 30-51.
    9. Emmanuel Dechenaux & Dan Kovenock & Roman Sheremeta, 2015. "A survey of experimental research on contests, all-pay auctions and tournaments," Experimental Economics, Springer;Economic Science Association, vol. 18(4), pages 609-669, December.
    10. Name Correa, Alvaro J. & Yildirim, Huseyin, 2024. "Multiple prizes in tournaments with career concerns," Journal of Economic Theory, Elsevier, vol. 215(C).
    11. Sharma, Priyanka & Wagman, Liad, 2020. "Advertising and Voter Data in Asymmetric Political Contests," Information Economics and Policy, Elsevier, vol. 52(C).
    12. Wu, Zenan & Zheng, Jie, 2017. "Information sharing in private value lottery contest," Economics Letters, Elsevier, vol. 157(C), pages 36-40.
    13. Philip Brookins & Dmitry Ryvkin, 2014. "An experimental study of bidding in contests of incomplete information," Experimental Economics, Springer;Economic Science Association, vol. 17(2), pages 245-261, June.
    14. Cohen, Din & Sela, Aner, 2020. "Common-value group contests with asymmetric information," Economics Letters, Elsevier, vol. 192(C).
    15. Deck, Cary & Sheremeta, Roman M., 2019. "The tug-of-war in the laboratory," European Journal of Political Economy, Elsevier, vol. 60(C).
    16. Scoppa, Vincenzo, 2013. "Fatigue and Team Performance in Soccer: Evidence from the FIFA World Cup and the UEFA European Championship," IZA Discussion Papers 7519, Institute of Labor Economics (IZA).
    17. Roman Sheremeta, 2018. "Experimental Research on Contests," Working Papers 18-07, Chapman University, Economic Science Institute.
    18. Peter-J. Jost, 2021. "Competitive Balance and the Away Goals Rule During Extra Time," Journal of Sports Economics, , vol. 22(7), pages 823-863, October.
    19. Sumit Goel, 2022. "Optimal grading contests," Papers 2205.05207, arXiv.org, revised Sep 2023.
    20. Sela, Aner, 2022. "Effort allocations in elimination tournaments," Economics Letters, Elsevier, vol. 211(C).

    More about this item

    Keywords

    Dynamic contests; discouragement effect; information design;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

    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:ube:dpvwib:dp2017. See general information about how to correct material in RePEc.

    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: Franz Koelliker (email available below). General contact details of provider: https://edirc.repec.org/data/vwibech.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.