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Information Favoritism and Scoring Bias in Contests

Author

Listed:
  • Shanglyu Deng

    (University of Maryland)

  • Hanming Fang

    (University of Pennsylvania)

  • Qiang Fu

    (National University of Singapore)

  • Zenan Wu

    (Peking University)

Abstract
Two potentially asymmetric players compete for a prize of common value, which is initially unknown, by exerting efforts. A designer has two instruments for contest design. First, she decides whether and how to disclose an informative signal of the prize value to players. Second, she sets the scoring rule of the contest, which varies the relative competitiveness of the players. We show that the optimum depends on the designer's objective. A bilateral symmetric contest - in which information is symmetrically distributed and the scoring bias is set to offset the initial asymmetry between players - always maximizes the expected total effort. However, the optimal contest may deliberately create bilateral asymmetry - which discloses the signal privately to one player, while favoring the other in terms of the scoring rule - when the designer is concerned about the expected winner's effort. The two instruments thus exhibit complementarity, in that the optimum can be made asymmetric in both dimensions even if the players are ex ante symmetric. Our results are qualitatively robust to (i) affiliated signals and (ii) endogenous information structure. We show that information favoritism can play a useful role in addressing affirmative action objectives.

Suggested Citation

  • Shanglyu Deng & Hanming Fang & Qiang Fu & Zenan Wu, 2023. "Information Favoritism and Scoring Bias in Contests," PIER Working Paper Archive 23-002, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    • Handle: RePEc:pen:papers:23-002
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    References listed on IDEAS

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    More about this item

    Keywords

    All-pay Auction; Contest Design; Information Favoritism; Scoring Bias;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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