Harnessing Beliefs to Stimulate Efforts

47 Pages Posted: 16 Nov 2015 Last revised: 4 Oct 2018

See all articles by Marco Serena

Marco Serena

Max Planck Institute for Tax Law and Public Finance

Date Written: September 25, 2017

Abstract

A contestant's effort depends on her knowledge of her rival's type. This knowledge is often limited in real-life contests. I propose a model where the principal of a contest has commitment power to verifiably disclose contestants' types. What is the optimal disclosure policy to stimulate contestants' efforts? Full disclosure spurs more (less) efforts than full concealment if the distribution of types is skewed towards high (low) types. However, if the principal can also partially disclose types, both full disclosure and full concealment are outperformed by a particular form of partial disclosure, regardless of the skewness of the distribution of types; this is achieved by disclosing the signal which is best for the principal (i.e. all contestants are high types) and concealing the rest.

Keywords: Contests, Information Disclosure, Strategic Complements and Substitutes, Skewness

JEL Classification: C72, C82, D82

Suggested Citation

Serena, Marco, Harnessing Beliefs to Stimulate Efforts (September 25, 2017). Working Paper of the Max Planck Institute for Tax Law and Public Finance No. 2018-11. Available at SSRN: https://ssrn.com/abstract=2686543 or http://dx.doi.org/10.2139/ssrn.2686543

Marco Serena (Contact Author)

Max Planck Institute for Tax Law and Public Finance ( email )

Marstallplatz 1
Munich, 80539
Germany

Register to save articles to
your library

Register

Paper statistics

Downloads
187
Abstract Views
813
rank
160,610
PlumX Metrics