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Voluntary disclosure in asymmetric contests


Ewerhart, Christian; Lareida, Julia (2021). Voluntary disclosure in asymmetric contests. Working paper series / Department of Economics 279, 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.

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.

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Working Paper Series > Department of Economics
Dewey Decimal Classification:330 Economics
JEL Classification:C72, D74, D82, J71
Uncontrolled Keywords:Asymmetric contests, incomplete information, disclosure, strategic complements and substitutes, dominance and defiance, Bayesian persuasion, Jensen's inequality, Spieltheorie, Ungerechtigkeit, Auskunft, Dominanz, Abweichendes Verhalten
Language:English
Date:January 2021
Deposited On:14 Feb 2018 16:38
Last Modified:13 Jan 2021 09:49
Series Name:Working paper series / Department of Economics
Number of Pages:92
ISSN:1664-7041
Additional Information:Revised version; Former title: Voluntary disclosure in unfair contests
OA Status:Green
Official URL:https://www.econ.uzh.ch/en/research/workingpapers.html?paper-id=958

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