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Rent seeking with private values

In: 40 Years of Research on Rent Seeking 1

Author

Listed:
  • David A. Malueg

    (Tulane University)

  • Andrew J. Yates

    (University of Richmond)

Abstract

We study a rent-seeking contest in which the players’ valuations of the prize are private information. We determine a Bayesian equilibrium and give conditions under which the equilibrium exists. Although players are ex ante symmetric, increased possibilities for ex post lopsidedness lead to less aggressive bidding. (Lopsidedness increases as players ’ values become less positively correlated or as the variation in possible values increases.) We also compare the private-information contest to a related public-information contest in which the realizations of values are common knowledge. The contests are equally efficient and players are indifferent between the two, but risk-averse sellers of the prize are not.

Suggested Citation

  • David A. Malueg & Andrew J. Yates, 2004. "Rent seeking with private values," Springer Books, in: Roger D. Congleton & Arye L. Hillman & Kai A. Konrad (ed.), 40 Years of Research on Rent Seeking 1, pages 503-520, Springer.
    • Handle: RePEc:spr:sprchp:978-3-540-79182-9_36
    DOI: 10.1007/978-3-540-79182-9_36
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    Cited by:

    1. Barbieri, Stefano & Serena, Marco, 2024. "Winner's effort in multi-battle team contests," Games and Economic Behavior, Elsevier, vol. 145(C), pages 526-556.
    2. Wu, Zenan & Zheng, Jie, 2017. "Information sharing in private value lottery contest," Economics Letters, Elsevier, vol. 157(C), pages 36-40.
    3. Giebe, Thomas, 2014. "Innovation contests with entry auction," Journal of Mathematical Economics, Elsevier, vol. 55(C), pages 165-176.
    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. Herbst, Luisa & Konrad, Kai A. & Morath, Florian, 2015. "Endogenous group formation in experimental contests," European Economic Review, Elsevier, vol. 74(C), pages 163-189.
    6. repec:fsu:wpaper:wp2014_09_02 is not listed on IDEAS
    7. Konrad, Kai A., 2007. "Strategy in contests: an introduction [Strategie in Turnieren – eine Einführung]," Discussion Papers, Research Unit: Market Processes and Governance SP II 2007-01, WZB Berlin Social Science Center.
    8. Vasudha Chopra & Hieu M. Nguyen & Christian A. Vossler, 2020. "Heterogeneous group contests with incomplete information," Working Papers 2020-05, University of Tennessee, Department of Economics.
    9. Kai A. Konrad & Florian Morath, 2017. "Escalation in Dynamic Conflict: On Beliefs and Selection," Working Papers tax-mpg-rps-2017-05, Max Planck Institute for Tax Law and Public Finance.

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