American Economic Journal: Microeconomics
no. 1, February 2023
In perfectly discriminating contests with private information, low-ability contestants prefer to appear strong, while high-ability contestants prefer to appear weak. In a two-stage contest, this leads to a unique symmetric equilibrium with partial pooling in the first stage. A higher output in the first contest leads to a weakly higher belief about the contestant's ability entering the second contest. We characterize this unique equilibrium when cost of effort is linear and show how the prize allocation and type distribution impact contestants' expected output, payoffs, and the probability of surprise victories.
"Two-Stage Contests with Private Information."
American Economic Journal: Microeconomics,
Asymmetric and Private Information; Mechanism Design
Search; Learning; Information and Knowledge; Communication; Belief; Unawareness