STICERD Work in Progress Seminars
Spying in Contests
Zhuoqiong (Charlie) Chen (LSE)
Friday 18 November 2016 13:00 - 14:00
Due to the onging coronavirus outbreak, many of our seminars and public events this year will continue as online seminars. Please check our website listings and Twitter feed @STICERD_LSE for updates.
About this event
Two players compete for a prize and their valuations are private information. Before the contest, each player can covertly acquire a costly, noisy and private signal regarding the opponent's valuation. In equilibrium, each player's effort is non-decreasing (non-increasing) in the posterior probability that the opponent has the same (a different) valuation. Accounting for the cost of spying, players are strictly better off than not spying on each other at all. Suppose instead that without incurring any cost to any player, each player can ex ante commit to disclose a signal about her valuation to the opponent, but cannot observe realizations of the signal. Then there does not exist any equilibrium in which both players disclose an informative signal to the opponent, even though doing so would benefit both players.