Economic Theory

, Volume 63, Issue 4, pp 925–942

The value of public information in common-value Tullock contests

Research Article

DOI: 10.1007/s00199-016-0974-3

Cite this article as:
Einy, E., Moreno, D. & Shitovitz, B. Econ Theory (2017) 63: 925. doi:10.1007/s00199-016-0974-3
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Abstract

Consider a symmetric common-value Tullock contest with incomplete information in which the players’ cost of effort is the product of a random variable and a deterministic real function of effort, d. We show that the Arrow–Pratt curvature of d\(R_{d},\) determines the effect on equilibrium efforts and payoffs of the increased flexibility/reduced commitment that more information introduces into the contest: If \(R_{d}\) is increasing, then effort decreases (increases) with the level of information when the cost of effort (value) is independent of the state of nature. Moreover, if \(R_{d}\) is increasing (decreasing), then the value of public information is nonnegative (nonpositive).

Keywords

Tullock contests Common values Value of public information 

JEL Classfication

C72 D44 D82 

Copyright information

© Springer-Verlag Berlin Heidelberg 2016

Authors and Affiliations

  1. 1.Department of EconomicsBen-Gurion University of the NegevBeershebaIsrael
  2. 2.Departamento de EconomíaUniversidad Carlos III de MadridMadridSpain
  3. 3.Department of EconomicsUniversity of HaifaHaifaIsrael