Public Choice

, Volume 151, Issue 3–4, pp 679–693 | Cite as

Information alliances in contests with budget limits

Article

Abstract

We study the role of information exchange that may occur in alliances in a contest without noise. Contestants learn their own limits of what they can spend in a contest. They may also form alliances and learn the limits of all players who are within the same alliance. Then they decide independently about their own contest efforts. Alliance formation for the purpose of information exchange is beneficial for members of the same alliance and neutral for all other players. Also, a merger between alliances is beneficial for their members. Further, we identify and discuss the set of stable alliance combinations.

Keywords

Contest Budget limits Incomplete information Alliances Information sharing 

JEL Classification

D72 D74 

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Copyright information

© Springer Science+Business Media, LLC 2011

Authors and Affiliations

  1. 1.Max Planck Institute for Tax Law and Public FinanceMunichGermany
  2. 2.Department of Public EconomicsUniversity of MunichMunichGermany

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