Signaling in a Rent-Seeking Contest with One-Sided Asymmetric Information

Pim Heijnen*, Lambert Schoonbeek

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

2 Citations (Scopus)

Abstract

We consider a two-player rent-seeking Tullock contest where one player has private information about his valuation of the prize, which can be high or low. This player can send a costly signal to his opponent, i.e., he can commit to reduce the prize either by some absolute amount of money or proportionally, conditional on winning it. We show that both kinds of signaling imply completely opposite results for separating equilibria, both in terms of conditions for existence and the type of player who sends the costly signal.

Original languageEnglish
Pages (from-to)548-564
Number of pages17
JournalJournal of Public Economic Theory
Volume19
Issue number2
DOIs
Publication statusPublished - Apr-2017

Keywords

  • INCOMPLETE INFORMATION
  • STRATEGIC DISCLOSURE

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