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Voluntary disclosure in asymmetric contests

Christian Ewerhart () and Julia Lareida
Authors registered in the RePEc Author Service: Julia Grünseis

No 279, ECON - Working Papers from Department of Economics - University of Zurich

Abstract: This paper studies the incentives for interim voluntary disclosure of verifiable information in probabilistic all-pay contests. Provided that the contest is uniformly asymmetric, full revelation is the unique perfect Bayesian equilibrium outcome. This is so because the weakest type of the underdog will try to moderate the favorite, while the strongest type of the favorite will try to discourage the underdog─so that the contest unravels. Self-disclosure is optimal even though a weak favorite or strong underdog may be induced to raise their efforts, i.e., show "dominant" or "defiant" reactions. To avert Pareto inferior unraveling, the favorite may prefer to shut down communication, but this is never the case for the underdog. We also consider partial information release, cheap talk, Bayesian persuasion, information design, correlation, and continuous types. Applications are discussed. The proofs employ novel arguments in monotone comparative statics and an improved version of Jensen's inequality.

Keywords: Asymmetric contests; incomplete information; disclosure; strategic complements and substitutes; dominance and defiance; Bayesian persuasion; Jensen's inequality (search for similar items in EconPapers)
JEL-codes: C72 D74 D82 J71 (search for similar items in EconPapers)
Date: 2018-02, Revised 2021-01
New Economics Papers: this item is included in nep-gth and nep-mic
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