Rent-seeking Contests under Symmetric and Asymmetric Information

Cédric Wasser

Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems from Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich

Abstract: We consider a variant of the Tullock rent-seeking contest. Under symmetric information we determine equilibrium strategies and prove their uniqueness. Then, we assume contestants to be privately informed about their costs of effort. We prove existence of a pure-strategy equilibrium and provide a sufficient condition for uniqueness. Comparing different informational settings we find that if players are uncertain about the costs of all players, aggregate effort is lower than under both private and complete information. Yet, under additional assumptions, rent dissipation is still smaller in the latter settings. Numerical examples illustrate that there is no general ranking between private and complete information. The results depend on the distribution costs are drawn from and on the exact specification of the contest success function.

Keywords: Rent-seeking; Contest; Asymmetric Information; Private values (search for similar items in EconPapers)
JEL-codes: C72 D72 D74 D82 (search for similar items in EconPapers)
Date: 2010-03
New Economics Papers: this item is included in nep-cta
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Related works:
Journal Article: Incomplete information in rent-seeking contests (2013)
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