Entry and disclosure in group contests

Abstract

We study information disclosure policies for contests among groups. Each player endogenously decides whether or not to participate in competition as a member of their group. Within-group aggregation of effort is best-shot, i.e., each group's performance is determined by the highest investment among its members. We consider a generalized all-pay auction setting, in which the group with the highest performance wins the contest with certainty. Players' values for winning are private information at the entry stage, but may be disclosed at the competition stage. We compare three disclosure policies: (i) no disclosure, when the number of entrants remains unknown and their values private; (ii) within-group disclosure, when this information is disclosed within each group but not across groups; and (iii) full disclosure, when the information about entrants is disclosed across groups. For the benchmark case of contests between individuals, information disclosure always reduces expected aggregate investment. However, this is no longer true in group contests: Within-group disclosure unambiguously raises aggregate investment, while the effect of full disclosure is ambiguous.