Asymmetric information contests |
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Authors: | Terrance M Hurley Jason F Shogren |
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Institution: | aDepartment of Environmental and Natural Resource Economics, University of Rhode Island, 5 Lippett Road, Room 319, Kingston, RI 02881-0804 USA;bDepartment of Economics and Finance, University of Wyoming, Laramie, USA |
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Abstract: | We consider how asymmetries in information affect contest behavior. We find two effects drive behavior-risk and perceptions of an opponent's value. Our results also suggest that the more tractable one-sided asymmetric information contest might be sufficient to capture contest behavior under uncertainty. However, the efficiency of a contest is sensitive to asymmetric information and the distribution a players' values because players with relatively low values can have an increased probability of success. Thus, it is important (a) to account for information asymmetries to avoid biasing predicted efficiency, and (b) to recognize that this bias is unsystematic. |
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Keywords: | Asymmetric information Contests Rent-seeking Risk |
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