Fighting for Lemons: The Encouragement Effect in Dynamic Contests with Private Information

Beccuti, Juan; Möller, Marc (November 2020). Fighting for Lemons: The Encouragement Effect in Dynamic Contests with Private Information (Discussion Papers 20-17). Bern: Department of Economics

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This paper proposes a tractable model of a dynamic contest where players have private information about the contest’s prize. We show that private information helps to encourage players who have fallen behind, leading to an increase in aggregate incentives. We derive the optimal information design for a designer interested in the maximization of aggregate effort. Optimal signals turn out to be private and imperfectly informative and aim to level the playing field at any stage of the
dynamic interaction

Item Type:

Working Paper

Division/Institute:

03 Faculty of Business, Economics and Social Sciences > Department of Economics

UniBE Contributor:

Beccuti Vazquez, Juan Ignacio and Möller, Marc

Subjects:

300 Social sciences, sociology & anthropology > 330 Economics

Series:

Discussion Papers

Publisher:

Department of Economics

Language:

English

Submitter:

Dino Collalti

Date Deposited:

13 Jan 2021 17:23

Last Modified:

13 Jan 2021 17:31

BORIS DOI:

10.48350/150914

URI:

https://boris.unibe.ch/id/eprint/150914

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