Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/54586
Authors: 
Konrad, Kai A.
Year of Publication: 
2010
Series/Report no.: 
WZB Discussion Paper SP II 2010-21
Abstract: 
We study the role of information exchange through alliances in a framework with contestants who have binding budget limits and know their own budget limit but are incompletely informed about other contestants' budget limits. First, we solve for the Bayesian Nash equilibrium. Then we consider the role of information exchange through alliances. Contestants learn the budget limits of all players who are within the same alliance, and then decide independently about their own contest efforts. This type of alliance formation is beneficial for alliance members and neutral for players who do not belong to the alliance. Also, a merger between alliances is beneficial for their members. Further, we consider merger between alliances and discuss the set of stable combinations of alliances.
Subjects: 
Contest
budget limits
incomplete information
alliances
information sharing
JEL: 
D72
D74
Document Type: 
Working Paper

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