Information alliances in contests with budget limits

Kai Konrad

Discussion Papers, Research Professorship & Project "The Future of Fiscal Federalism" from WZB Berlin Social Science Center

Abstract: We study the role of information exchange through alliances in a framework with contestants who have binding budget limits and know their own budget limit but are incompletely informed about other contestants' budget limits. First, we solve for the Bayesian Nash equilibrium. Then we consider the role of information exchange through alliances. Contestants learn the budget limits of all players who are within the same alliance, and then decide independently about their own contest efforts. This type of alliance formation is beneficial for alliance members and neutral for players who do not belong to the alliance. Also, a merger between alliances is beneficial for their members. Further, we consider merger between alliances and discuss the set of stable combinations of alliances.

Keywords: Contest; budget limits; incomplete information; alliances; information sharing (search for similar items in EconPapers)
JEL-codes: D72 D74 (search for similar items in EconPapers)
Date: 2010
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Related works:
Journal Article: Information alliances in contests with budget limits (2012)
Working Paper: Information alliances in contests with budget limits (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:wzbfff:spii201021

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