Private‐information group contests with complementarities

Abstract

AbstractWe model competing groups when players' values for winning are private information, the effort complementarity is uncertain at the time efforts are exerted, and the group with the best performance wins the contest. We analyze the effects of increasing the number of team members and the anticipated complementarity of efforts. We find that the effort underprovision brought about by a larger group membership is especially severe if the complementarity is high. More generally, higher complementarity may exacerbate rather than alleviate the underprovision of effort. Members of groups that are otherwise symmetric—and only differ with respect to the anticipated complementarity of efforts—use the same equilibrium strategy. And, when groups differ only in size, members of the smaller group act more aggressively, but the smaller or larger group may be more likely to win.