Three Essays on the Incentives for Information Acquisition and Information Sharing in Competitive Environments
This dissertation includes three essays on players' incentives to acquire or share private information in competitive environments.
In chapter 2, I study the role of one-sided private information in a two-player first-price all-pay auction where one player's valuation of prize is common knowledge while the other's is privately known. Then I study the incentives of spying in cases where spying (i) can be caught with an exogenous probability and (ii) can be fed false information after caught. I find that spying can be discouraged by increasing the chance of catching a spy, and spying may even be completely deterred when false information is fed back after catching a spy.
In chapter 3, I study the incentives to form a quid pro quo information sharing agreement between ex ante symmetric players ahead of contests. I find that a limited-membership alliance, which includes a strict subset of all players, may arise even in the presence of small organization costs while an industry-wide sharing agreement may not. Such an alliance can strictly benefit alliance members, but may benefit or hurt the outsider. Even when the outsider is hurt, a Pareto improvement is possible if transfers can be arranged between alliance members and non-alliance members.
In chapter 4, I extend the analysis of chapter 3 to a first-price auction. I find that a limited-membership information-sharing alliance can lead to Pareto improvements when players' private values take three discrete types. Furthermore, the player outside the alliance benefit strictly more than alliance players from the alliance.