Competitive balance: Information disclosure and discrimination in an asymmetric contest.

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Date: Apr. 2021
Publisher: Elsevier B.V.
Document Type: Report; Brief article
Length: 184 words

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Abstract :

Keywords Asymmetric contest; Information design; Discrimination Abstract We study a design problem for an effort-maximizing principal in a two-player contest with two dimensions of asymmetry. Players have different skill levels and an information gap exists, as only one player knows the skill difference. The principal has two policy instruments to redress the lack of competitive balance due to asymmetry; she can commit to an information-disclosing mechanism, and she can discriminate one of the players by biasing his effort. We characterize the optimal level of discrimination to maximize aggregate effort, showing how this inextricably determines the choice of information disclosure. Applications are found in newcomer-incumbent situations in an internal labor market, sales-force management, and research contests. Author Affiliation: (a) School of Business and Economics, UiT the Arctic University of Norway, Norway (b) Oslo Business School, Oslo Metropolitan University, Norway * Corresponding author. Article History: Received 18 August 2020; Revised 21 December 2020; Accepted 30 January 2021 (footnote)[white star] We would like to thank two anonymous referees for insightful comments. Any remaining errors are our own. Byline: Derek J. Clark [derek.clark@uit.no] (a), Tapas Kundu [tapas.kundu@oslomet.no] (*,b)

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Gale Document Number: GALE|A655748626