RANKING DISCLOSURE POLICIES IN ALL‐PAY AUCTIONS

Abstract

In this paper, we study information disclosure policies in all‐pay auctions with incomplete information. Two symmetric players have either high or low private value. The contest organizer observes players' values ex post, and can commit ex ante to four different symmetric information policies exhaustively: She can fully disclose or conceal the players' types, and she can disclose their types if and only if when both are high or if and only if when both are low. We characterize the unique equilibriums, and completely rank the four policies by various criteria. We find the full concealment policy extracts highest aggregate expected effort, followed by the policy of disclosing types if and only if when both are high. The policy of disclosing types if and only if when both are low induces least aggregate expected effort. Players enjoy highest expected payoffs under the policy of disclosing types if and only if when both are low; the other three policies yield the same expected payoffs to players. In terms of prize allocation efficiency, the full concealment policy is ranked highest and the full disclosure policy is ranked lowest. In between, the other two policies' rankings depend on the probability of high type. (JELC72, D44, D82, D83, J48).