Wasser, Cédric.
(2013)
* Incomplete Information in Rent-seeking Contests.*
Economic Theory, 53 (1).
pp. 239-268.

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Official URL: https://edoc.unibas.ch/72617/

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## Abstract

We consider a variant of the Tullock lottery contest. Each player’s constant marginal cost of effort is drawn from a potentially different continuous distribution. In order to study the impact of incomplete information, we compare three informational settings to each other; players are either completely informed, privately informed about their own costs, or ignorant of all cost realizations. For the first and the third setting, we determine the unique pure-strategy Nash equilibrium. Under private information, we prove existence of a pure-strategy Bayesian Nash equilibrium and identify a sufficient condition for uniqueness. Assuming that unit cost distributions all have the same mean, we show that under ignorance of all cost realizations ex ante expected aggregate effort is lower than under both private and complete information. Ex ante expected rent dissipation, however, is higher than in the latter settings if we focus on the standard lottery contest and assume costs are all drawn from the same distribution. Between complete and private information, there is neither a general ranking in terms of effort nor in terms of rent dissipation.

Faculties and Departments: | 06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Mikroökonomische Theorie (Nöldeke) |
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UniBasel Contributors: | Wasser, Cédric |

Item Type: | Article, refereed |

Article Subtype: | Research Article |

Publisher: | Springer-Verlag |

ISSN: | 0938-2259 |

e-ISSN: | 1432-0479 |

Note: | Publication type according to Uni Basel Research Database: Journal article |

Identification Number: | |

Last Modified: | 12 Nov 2019 10:28 |

Deposited On: | 12 Nov 2019 10:28 |

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