Information Sharing in Private Value Lottery Contest

Abstract

We study the incentives of players to disclose information on their private valuations of the prize ahead of a rent-seeking contest. We show that information sharing can arise in equilibrium if types are concentrated enough, whereas sharing information is strictly dominated if types are sufficiently dispersed. This result contrasts with the conclusion of the literature on information sharing in all-pay auctions (Cournot competition) where players (firms) always find it unprofitable (profitable) to commit to disclose their private information. We also compare the designer's revenue and social welfare under different information regimes.

Keywords: Tullock Contests, Private Values, Information Sharing

JEL Classification: D44, D82, C72