Heterogeneous group contests with incomplete information

Vasudha Chopra, Hieu Nguyen () and Christian Vossler
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Hieu Nguyen: Department of Economics, University of Tennessee

No 2020-05, Working Papers from University of Tennessee, Department of Economics

Abstract: This study examines how behavior in inter-group contests is altered when players have incomplete information on their opponent. We model a Tullock contest where there are two possible types of groups that are heterogeneous in the incentives they face, and players only know the probability their opponent is a particular group type. Relative to a contest with complete information, we find theoretically that incomplete information lowers contest-level effort in (even) contests between groups of the same type, whereas it increases effort in uneven contests. Through an experiment, we compare three sources of heterogeneity – differences in cost-of-effort, prize value, and group size. For the cost and value treatments, we find that incomplete information increases effort in uneven contests but has no effect in even contests. For the group size treatments, incomplete information has no effect. A theory that assumes players are altruistic towards group members, rather than purely self-interested, is much better at predicting outcomes.

Keywords: inter-group competition; heterogeneous contests; Tullock contests; incomplete information; public goods; group size paradox; experiments; altruism (search for similar items in EconPapers)
JEL-codes: C72 C92 D74 D82 D91 H41 (search for similar items in EconPapers)
Pages: 64 pages
Date: 2020-12
New Economics Papers: this item is included in nep-cdm, nep-cta, nep-exp and nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:ten:wpaper:2020-05

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