The value of public information in common value Tullock contests

Abstract

We study how changes in the information available to the players of a symmetric common-value Tullock contest with incomplete information affect their payoffs and their incentives to exert effort. For the class of contests where players' state dependent cost of effort is multiplicative, we show that if the players' Arrow-Pratt measure of relative risk aversion is increasing (decreasing), then the value of Public information is positive (negative). Moreover, if players' cost of effort (value) is state independent, then players' effort decreases (increases) with the level of information.