DP15855 Optimal Sequential Contests

Author(s): Toomas Hinnosaar
Publication Date: February 2021
Keyword(s): contest design, oligopoly, Public Goods, R&D, rent-seeking
JEL(s): C72, C73, D72, D74, D82
Programme Areas: Industrial Organization
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=15855

I study sequential contests where the efforts of earlier players may be disclosed to later players by nature or by design. The model has a range of applications, including rent seeking, R&D, oligopoly, public goods provision, and tragedy of the commons. I show that information about other players' efforts increases the total effort. Thus, the total effort is maximized with full transparency and minimized with no transparency. I also show that in addition to the first-mover advantage, there is an earlier-mover advantage. Finally, I derive the limits for large contests.