Know thy enemy: Information acquisition in contests

Abstract

This paper studies the incentives for and consequences of acquiring information about rivals in winner-take-all contests. Each player can acquire private information about the rival’s value from an arbitrarily large set of signals before the competition. A player who acquires a more accurate signal than their rival wins more often with the same expected effort as the rival. Being the target of a rival’s information acquisition does not harm the player, and learning partial information about each other benefits both players. Nevertheless, they may choose not to acquire any information if the accuracies of their signals are not publicly observable.