Disclosure and Favoritism in Sequential Elimination Contests

Abstract

We consider a two-stage contest, in which only a subset of contestants enters the finale. We explore the optimal policy for disclosing contestants’ interim status after the preliminary round, i.e., their interim ranking and elimination decision. The optimum depends on the design objective. We fully characterize the conditions under which disclosure or concealment emerges as the optimum. We further allow the organizer to bias the competition based on finalists’ interim rankings, which endogenizes the dynamic structure of the contest. Concealment outperforms in generating total effort, while disclosure prevails when maximizing the expected winner’s total effort. (JEL C72, L22)

Differential treatment and the winner's effort in contests with incomplete information

“…Considering lottery contests, Serena (2017) studies the design of multiplicative biases among heterogeneous contestants and Barbieri and Serena (2021) investigate the design of the temporal structure to maximize the expected winner's effort. Fu and Wu (2022) consider two-stage nested Tullock contests and let the organizer choose whether to disclose contestants' interim status after the preliminary round, whereas Deng et al (2020) analyze the effect of information policies in a lottery contest with one-sided private information.…”

Multiple designer's objectives in business contests

“…Che and Gale (1998), Fang (2002), and Matejka et al (2002) investigated lobbying caps that take the form of a constraint on the expenditure of the contestants. Fu et al (2021) investigate optimal bid caps in a noisy multiplayer contest where a higher bid does not always guarantee a win. Olszewski and Siegel (2019) investigated the impact of rigid and flexible bid caps on all‐pay contestants' aggregate costs and aggregate bids.…”

Differential Treatment and the Winner's Effort in Contests with Incomplete Information

“…Considering lottery contests, Serena (2017) studies the design of multiplicative biases among heterogeneous contestants and Barbieri and Serena (2021) investigate the design of the temporal structure to maximize the expected winner's effort. Fu and Wu (2022) consider two-stage nested Tullock contests and let the organizer choose whether to disclose contestants' interim status after the preliminary round, whereas Deng et al (2020) analyze the effect of information policies in a lottery contest with one-sided private information.…”