Tullock Contests with Asymmetric Information

Abstract: We show that under standard assumptions every member of a broad class of generalized Tullock contests with asymmetric information has a pure strategy Bayesian Nash equilibrium. Next we study common-value Tullock contests. We show that in equilibrium the expected payoff of a player is greater or equal to that of any other player with less information, i.e., an information advantage is rewarded. Moreover, if there are only two players and one of them has an information advantage, then in the unique equilibrium both players exert the same expected effort, although the less informed player wins the prize more frequently. These latter properties do not extend to contests with more than two players. Interestingly, players may exert more effort in a Tullock contest than in an all-pay auction.