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Contests with revisions

Published online by Cambridge University Press:  14 March 2025

Emmanuel Dechenaux Open the ORCID record for Emmanuel Dechenaux [Opens in a new window]  and
Shakun D. Mago Open the ORCID record for Shakun D. Mago [Opens in a new window]
Emmanuel Dechenaux*
Affiliation:
Department of Economics, Kent State University, Kent, OH 44242-001, USA
Shakun D. Mago*
Affiliation:
Robins School of Business, University of Richmond, 1 Gateway Road, Richmond, VA 23173, USA
*
edechena@kent.edu
sdatta@richmond.edu
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Abstract

As informational leakages become a common occurrence in economic and business settings, the impact of observability on behavior in adversarial situations assumes increased importance. Consider a two-player contest where there is a probabilistic information leak about one player’s action and the recipient of the information has the ability to revise his contest expenditure in response to the leaked rival choice. How does the ability to revise and resubmit affect each contestant’s behavior? We design a laboratory experiment to study this question for two well-known contest games: the lottery contest and the all-pay auction. Equilibrium predicts that compared to simultaneous moves, the strategic asymmetry arising from the ability to revise has no effect on expected expenditure in the lottery contest. In contrast, in the all-pay auction expected expenditure is decreasing in the probability of informational leakage. Experimental data support these predictions despite overexpenditure relative to equilibrium. Furthermore, the potential observability of the rival’s action confers an advantage on the informed player not only in the all-pay auction, as theory predicts, but also in the lottery contest if the probability of leakage is high.

Keywords

ContestSequentialInformational leakageCommitmentFlexibility

JEL classification

C91: Laboratory, Individual Behavior D72: Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior C72: Noncooperative Games
Type
Original Paper
Information
Experimental Economics , Volume 26 , Issue 4 , September 2023 , pp. 915 - 954
Copyright
Copyright © The Author(s), under exclusive licence to Economic Science Association 2023.

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Footnotes

Supplementary Information The online version contains supplementary material available at https://doi.org/10.1007/s10683-023-09803-z.

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