Information sharing in contests

Kovenock, Dan; Morath, Florian and Münster, Johannes (September 2010): Information sharing in contests. SFB/TR 15 Discussion Paper No. 334

Abstract

We study the incentives to share private information ahead of contests, such as markets with promotional competition, procurement contests, or R&D. We consider the cases where firms have (i) independent values and (ii) common values of winning the contest. In both cases, when decisions to share information are made independently, sharing information is strictly dominated. With independent values, an industry-wide agreement to share information can arise in equilibrium. Expected effort is lower with than without information sharing. With common values, an industry-wide agreement to share information never arises in equilibrium. Expected effort is higher with than without information sharing.

• Item Type: Paper
• Keywords: information sharing; contest; all-pay auction
• Faculties: Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems; Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems > A1 - Allokationsmechanismen in Organisationen und Märkten; Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems > A2 - Konflikte in Organisations- und Steuerungsproblemen
• Subjects: 300 Social sciences > 330 Economics
• JEL Classification: D82, D43, D44, L13, D74
• Language: English