TITLE:
Information Policy in Contests with Little Noise
AUTHORS:
Pouya Azimi Garakani, Oliver Gürtler
KEYWORDS:
Information Policy, Contest, Mixed-Strategy Equilibrium
JOURNAL NAME:
Theoretical Economics Letters,
Vol.1 No.3,
November
7,
2011
ABSTRACT: In this paper, we analyze a contest organizer’s decision to release intermediate information to the contestants. Contrary to the existing literature, we assume that there is little noise affecting the contest outcome so that there may be only mixed-strategy equilibria at the contest stage. Optimal information policy is found to depend on the prize spread and information may be revealed if contestants are very heterogeneous. This is different from results in the previous literature, which finds that the optimal information policy is independent of the prize structure and that information should be concealed from the contestants in case they are heterogeneous.