Optimal Sequential Contests

TL;DR

This paper analyzes how transparency and timing affect effort levels in sequential contests across various economic scenarios, revealing that full transparency maximizes total effort and that earlier movers have advantages.

Contribution

It introduces a model of sequential contests with effort disclosure, showing how transparency influences total effort and identifying the advantages of early movers.

Findings

Full transparency maximizes total effort.

No transparency minimizes total effort.

Earlier movers have an advantage.

Abstract

I study sequential contests where the efforts of earlier players may be disclosed to later players by nature or by design. The model has a range of applications, including rent seeking, R&D, oligopoly, public goods provision, and tragedy of the commons. I show that information about other players' efforts increases the total effort. Thus, the total effort is maximized with full transparency and minimized with no transparency. I also show that in addition to the first-mover advantage, there is an earlier-mover advantage. Finally, I derive the limits for large contests.