EFFORT LEVELS IN A COURNOT-NASH CONTEST WITH ASYMMETRIC INFORMATION

Many contests exist where one player does not know his opponent's valu e of a fixed prize, e.g. unobservable non-market preferences for prese rvation. This paper explores how changes in the nature of a one-sided information asymmetry affect effort levels in a Cournot Nash contest. The results indicate that the uninformed player's effort is an uncerta in input such that his effort is inversely related to risk. This reduc es his average odds of success. Comparative static results are driven by the perceived odds of success and risk for the uninformed player an d the actual odds of success for the informed player. (C) 1998 Elsevie r Science S.A.