 When to disclose the number of contestants: Theory and experimental evidenceQian Jiao, Changxia Ke and Yang Liu Journal of Economic Behavior & Organization, 2022, vol. 193, issue C, 146-160 Abstract: This paper investigates whether it is optimal for a contest organizer to disclose the actual number of contestants for total effort optimization when entry in a contest is costly and endogenous. Our model suggests that in a Tullock (1980) contest, the answer depends on the convexity of the cost of effort function. Even though the equilibrium entry rate and rent dissipation are invariant to the disclosure policy, disclosing (concealing) the actual number of entrants can lead to a higher total effort when the cost function is concave (convex). To test these theoretical predictions, we design a 2×3 between-subjects laboratory experiment using lottery contests. We vary the disclosure policy (fully disclosed vs. fully concealed) in one dimension and the curvature of the cost of effort function (concave, linear, or convex) in the other dimension. Our results are largely consistent with the theoretical predictions regarding the optimal disclosure policy, despite the presence of moderate over-entry and over-exertion behavior that is commonly observed in experimental studies of contests. Keywords: Contests; Endogenous entry; Information disclosure; Experiment (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:193:y:2022:i:c:p:146-160 DOI: 10.1016/j.jebo.2021.11.018 Access Statistics for this article Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D. More articles in Journal of Economic Behavior & Organization from Elsevier |
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