Communication and commitment in contests - Kölner UniversitätsPublikationsServer

Fu, Qiang ORCID: 0000-0003-0381-781X, Gürtler, Oliver ORCID: 0000-0001-7792-5325 and Münster, Johannes (2013). Communication and commitment in contests. Journal of Economic Behavior & Organization, 95. 1 - 19. AMSTERDAM: Elsevier. ISSN 1879-1751

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DOI:10.1016/j.jebo.2013.08.011

Link to the document: https://doi.org/10.1016/j.jebo.2013.08.011

Abstract

Players often engage in high-profile public communications to demonstrate their confidence in winning before they carry out actual competitive activities. We investigate players' incentives to engage in such pre-contest communication. Our key assumption is that a player suffers a cost when he sends a message of confidence but later loses the contest. Sending a message thus increases one's incentive to win. For the favorite, this has the beneficial strategic effect of decreasing the underdog's equilibrium effort. In a standard Tullock contest model, however, with no costs of entry and complete information, this strategic advantage is not strong enough to outweigh the cost of sending the message. Therefore, communication can only be beneficial if it deters the rival's entry into the contest, and under asymmetric information. (C) 2013 Elsevier B.V. All rights reserved.

Item Type:

Journal Article

Creators:

Creators	Email	ORCID	ORCID Put Code
Fu, Qiang	UNSPECIFIED	orcid.org/0000-0003-0381-781X	UNSPECIFIED
Gürtler, Oliver	UNSPECIFIED	orcid.org/0000-0001-7792-5325	UNSPECIFIED
Münster, Johannes	UNSPECIFIED	UNSPECIFIED	UNSPECIFIED