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Title: Communication and commitment in contests
Authors: Fu, Q. 
Gürtler, O.
Münster, J.
Keywords: Communication
Entry deterrence
Issue Date: Nov-2013
Citation: Fu, Q., Gürtler, O., Münster, J. (2013-11). Communication and commitment in contests. Journal of Economic Behavior and Organization 95 : 1-19. ScholarBank@NUS Repository.
Abstract: Players often engage in high-profile public communications to demonstrate their confidence in winning before they carry out actual competitive activities. We investigate players' incentives to engage in such pre-contest communication. Our key assumption is that a player suffers a cost when he sends a "message of confidence" but later loses the contest. Sending a message thus increases one's incentive to win. For the favorite, this has the beneficial strategic effect of decreasing the underdog's equilibrium effort. In a standard Tullock contest model, however, with no costs of entry and complete information, this strategic advantage is not strong enough to outweigh the cost of sending the message. Therefore, communication can only be beneficial if it deters the rival's entry into the contest, and under asymmetric information. © 2013 Elsevier B.V.
Source Title: Journal of Economic Behavior and Organization
ISSN: 01672681
DOI: 10.1016/j.jebo.2013.08.011
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