Financial Constraints and Multivariate Incomplete Information in the Mixture Model of Contests

Rene Kirkegaard

No 2402, Working Papers from University of Guelph, Department of Economics and Finance

Abstract: A general mixture model of contests is introduced. The contest combines multivariate adverse selection with moral hazard in the form of stochastic per-formance. Incomplete information does not add to the dimensionality of the problem, and actions are unambiguously strategic substitutes when technolo-gies are homogenous. These properties facilitate tractable comparative statics with respect to changes in the multivariate type distribution. Hence, the role of the dependence structure between di¤erent characteristics can be explored. To illustrate, if valuations and budgets become more positively dependent, then each types expenditure decreases but expected performance increases. With asymmetric agents, the exclusion principle can be reversed.

Keywords: Contests; exclusion principle; supermodular order. (search for similar items in EconPapers)
JEL-codes: C72 D72 D82 (search for similar items in EconPapers)
Pages: 63 pages
Date: 2023
New Economics Papers: this item is included in nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:gue:guelph:2024-02

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