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Harnessing Beliefs to Stimulate Efforts; on the Optimal Disclosure Policy in Contests

Author

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  • Marco Serena
Abstract
A contestant´s effort depends on her knowledge of her rival´s type. This knowledge is often limited in real-life contests. We propose a model where the principal of a contest has commitment power to verifiably disclose contestants´ types. We investigate the optimal disclosure policy to stimulate contestants´ efforts. Full disclosure stimulates more (less) effort than full concealment if the distribution of types is skewed toward high- (low-) types. However, regardless of the skewness, the optimal policy is to partially disclose; it is optimal to commit to disclose if the realization of types is most favorable to the principal and conceal otherwise.

Suggested Citation

  • Marco Serena, 2017. "Harnessing Beliefs to Stimulate Efforts; on the Optimal Disclosure Policy in Contests," Working Papers tax-mpg-rps-2018-11, Max Planck Institute for Tax Law and Public Finance.
    • Handle: RePEc:mpi:wpaper:tax-mpg-rps-2018-11
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    File URL: http://www.tax.mpg.de/RePEc/mpi/wpaper/TAX-MPG-RPS-2018-11.pdf
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    References listed on IDEAS

    as
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    Cited by:

    1. Subhasish M. Chowdhury & Patricia Esteve‐González & Anwesha Mukherjee, 2023. "Heterogeneity, leveling the playing field, and affirmative action in contests," Southern Economic Journal, John Wiley & Sons, vol. 89(3), pages 924-974, January.

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    More about this item

    Keywords

    Contests; Strategic Complements; Strategic Substitutes; Skewness; Information.;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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