Information acquisition in all-pay contests

This paper analyzes type-dependent information acquisition in an all-pay contest where two privately informed players can pay a fixed cost to learn their opponent’s type. We analyze and contrast two settings: one where this acquisition decision is covert (unobservable) and one where it is public (observable). Although information is only acquired below a cost threshold in both cases, the public setting creates a crucial strategic tension. The observable act of acquisition can discourage high-type players who wish to conceal their strength, while it may incentivize low-type players who can use the action to signal strength. These findings demonstrate that the option to acquire information is not just a preliminary step but a crucial strategic layer that endogenously shapes the contest’s information structure and influences subsequent efforts and outcomes.