Cost-of-Outlays in Imperfectly Discriminating Contests under Asymmetric Information
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This study analyzes the difference in cost-of-outlays in imperfectly discriminating contests under asymmetric information. It is important to analyze the impact of information on the outlay level under different informational regimes because we sometimes compete in a contest under asymmetric information about the opponent's ability, cost, and technological capability in diverse types of contests such as patent races, tournaments, arms races, electoral competition, social conflict, bargaining, and lobbying. First, players' propensities to spend need to be higher under public information and two-sided asymmetric information, as the game is more evenly matched in terms of the difference in costs. But under one-sided asymmetric information, the uninformed player increases his propensity to spend, while the informed player may increase or decrease his oulay, as the game becomes more evenly matched. And higher correlation in players' costs causes the propensity to spend to be higher. Second, a player's expected propensity to spend under public information is the same with his expected propensity to spend under two-sided asymmetric information. The uninformed player's expected propensity to spend under one-sided asymmetric information is equal to or smaller than the expected propensity to spend under public information and under two-sided asymmetric information. The informed player's propensity to spend under one-sided asymmetric information may be greater or smaller than those under public information and under two-sided asymmetry. This means that we cannot obtain an unambiguous relationship for the informed player's propensity to spend.
Abstract
This study analyzes the difference in cost-of-outlays in imperfectly discriminating contests under asymmetric information. It is important to analyze the impact of information on the outlay level under different informational regimes because we sometimes compete in a contest under asymmetric information about the opponent's ability, cost, and technological capability in diverse types of contests such as patent races, tournaments, arms races, electoral competition, social conflict, bargaining, and lobbying. First, players' propensities to spend need to be higher under public information and two-sided asymmetric information, as the game is more evenly matched in terms of the difference in costs. But under one-sided asymmetric information, the uninformed player increases his propensity to spend, while the informed player may increase or decrease his oulay, as the game becomes more evenly matched. And higher correlation in players' costs causes the propensity to spend to be higher. Second, a player's expected propensity to spend under public information is the same with his expected propensity to spend under two-sided asymmetric information. The uninformed player's expected propensity to spend under one-sided asymmetric information is equal to or smaller than the expected propensity to spend under public information and under two-sided asymmetric information. The informed player's propensity to spend under one-sided asymmetric information may be greater or smaller than those under public information and under two-sided asymmetry. This means that we cannot obtain an unambiguous relationship for the informed player's propensity to spend.
참고문헌 (22)
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