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Partial Verifiability Induced Contests

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  • Octavian Strimbu

Abstract

In a simple common agency (a first-price menu auction with two bidders), the interest groups compete for the political prize awarded by an official. I show that if in the complete information setting one drops the perfect verifiability of the outcome assumption, the ensuing game turns out to be a contest. As the conicting interest groups observe but may only partially verify the policy chosen by the official, they will play mixed strategies. I characterize these strategies and the interest groups'betting behaviour relative to their verification technologies. The probability of getting an inefficient policy as outcome of the inuence game is derived from the equilibrium strategies.

Suggested Citation

  • Octavian Strimbu, 2022. "Partial Verifiability Induced Contests," Cahiers de Recherches Economiques du Département d'économie 22.05, Université de Lausanne, Faculté des HEC, Département d’économie.
    • Handle: RePEc:lau:crdeep:22.05
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Contests; Common agency; Partial verifiability;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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