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Bayesian Persuasion in All-pay Auction Contests

  • Prof. Jie Zheng
  • 2019.11.06
  • Event
Speaker: Prof. Jie Zheng (Tsinghua University)


Bayesian Persuasion in All-pay Auction Contests



 15:00-16:15 pm, 2019/11/8 (Friday)


 Room 619, Teaching A


Prof. Jie Zheng (Tsinghua University)


We study the optimal information disclosure policy via Bayesian persuasion approach (Kamencia and Gentzkow, 2011) in a two-player all-pay auction contest with one-sided asymmetric information in both simultaneous move setup and sequential move setup. The designer can pre-commit to a signal device that generates a type-dependent distribution, signaling the type of the player with private information to the uninformed player. We completely characterize the optimal Bayesian persuasion signal in both simultaneous contests and sequential contests, and divide the effective Bayesian persuasion strategies into three categories (Threat, Fluke, and Harmony). As extensions of the model, we analyze the scenario where the informed contestant has the opportunity to reveal information after the designer’s disclosure policy is implemented, and the scenario where the designer can decide on the order of move for the contestants in addition to the information disclosure decision. Our results provide insights for the optimal design of information structure for situations where two information-asymmetric parties are competing against each other.