Johannes Münster

Selection Tournaments, Sabotage, and Participation

This paper studies sabotage in tournaments with at least three contestants, where the contestants know each other well. Every contestant has an incentive to direct sabotage specifically against his most dangerous rival. In equilibrium, contestants who choose a higher productive effort are sabotaged more heavily. This might explain findings from psychology, where victims of mobbing are sometimes found to be overachieving. Further, sabotage equalizes promotion chances. The effect is most pronounced if the production function is linear in sabotage, and the cost function depends only on the sum of all sabotage activities: in an interior equilibrium, who will win is a matter of chance, even when contestants differ a great deal in their abilities. This, in turn, has adverse consequences for who might want to participate in a tournament. Since better contestants anticipate that they will be sabotaged more strongly, it may happen that the most able stay out and the tournament selects one of the less able with probability one. I also study the case where some contestants are easy victims, i.e. easier to sabotage than others.

A Strategic Mediator Who is Biased into the Same Direction as the Expert Can Improve Information Transmission

This note reconsiders communication between an informed expert and an uninformed decision maker with a strategic mediator in a discrete Crawford and Sobel (1982) setting. We show that a strategic mediator may improve communication even when he is biased into the same direction as the expert. The mediator improves communication, however, only if some information transmission is possible with unmediated communication.

Information Policy in Tournaments with Sabotage

Sabotage is one of the main problems of tournament-like reward schemes. Workers who are leading in a tournament are more dangerous rivals, and are therefore sabotaged more heavily. This implies that there is an extra cost to becoming a leader and, hence, to choosing high productive effort in the early stages of a tournament. The incentives to exert productive effort are thereby reduced. We show that this problem can be solved by concealing intermediate information on the performances of workers (i.e., by clever information management). Moreover, we offer experimental evidence indicating that such information management does increase productive efforts.

Information sharing in contests

We study the incentives to share private information ahead of contests, such as markets with promotional competition, procurement contests, or R&D. We consider the cases where firms have (i) independent values and (ii) common values of winning the contest. In both cases, when decisions to share information are made independently, sharing information is strictly dominated. With independent values, an industry-wide agreement to share information can arise in equilibrium. Expected effort is lower with than without information sharing. With common values, an industry-wide agreement to share information never arises in equilibrium. Expected effort is higher with than without information sharing.

War with Outsiders Makes Peace Inside

This article presents a new theoretical perspective on the diversionary use of force. Players are partitioned into groups and choose how to allocate their resources to production, fighting against other groups, and fighting internally. The model gives a rationalist explanation of the group cohesion effect: when there is a lot of fighting between groups, there is less internal fighting. In equilibrium, players choose sufficiently high external conflict in order to avoid internal conflict. In contrast with the existing literature, this diversionary use of force takes place even though there is no asymmetric or incomplete information.

All equilibria of the multi-unit Vickrey auction

This paper completely characterizes the set of Nash equilibria of the Vickrey auction for multiple identical units when buyers have non-increasing marginal valuations and there at least three potential buyers. There are two types of equilibria: In the first class of equilibria there are positive bids below the maximum valuation. In this class, above a threshold value all bidders bid truthfully on all units. One of the bidders bids at the threshold for any unit for which his valuation is below the threshold; the other bidders bid zero in this range. In the second class of equilibria there are as many bids at or above the maximum valuation as there are units. The allocation of these bids is arbitrary across bidders. All the remaining bids equal zero. With any positive reserve price equilibrium becomes unique: Bidders bid truthfully on all units for which their valuation exceeds the reserve price.

Lobbying Contests with Endogenous Policy Proposals

Lobbyists choose what to lobby for. If they can precommit to certain policy proposals, their choice will have an influence on the behavior of opposing lobbyists. Hence lobbyists have an incentive to moderate their policy proposals in order to reduce the intensity of the lobbying contest. This logic has been explored in a number of recent papers. I reconsider the topic with a perfectly discriminating contest. With endogenous policy proposals, there is a sub-game perfect equilibrium where the proposals of the lobbyists coincide and maximize joint welfare; moreover, this equilibrium is the only one that survives repeated elimination of dominated strategies. Hence there is no rent dissipation at all. A politician trying to maximize lobbying expenditures would prefer an imperfectly discriminating contest.

Rational self-sabotage

We consider a dynamic tournament where contestants choose a productive effort and to help or sabotage their opponents. Sabotage lowers the output of the victim. Moreover, sabotage imposes an additional direct psychic cost on the victim. Because the current leader is sabotaged most strongly in the final stage, players help other players and even sabotage themselves early on.

Communication and Commitment in Contests

Players often engage in high-profile public communications to demonstrate their confidence in winning before they carry out actual competitive activities. We investigate players’ incentives to engage in such pre-contest communication. Our key assumption is that a player suffers a cost when he sends a “message of confidence” but later loses the contest. Sending a message thus increases ones incentive to win. For the favorite, this has the beneficial strategic effect of decreasing the underdogs equilibrium effort. In a standard Tullock contest model, however, with no costs of entry and complete information, this strategic advantage is not strong enough to outweigh the cost of sending the message. Therefore, communication can only be beneficial if it deters the rivals entry into the contest, and under asymmetric information.

Online shopping and platform design with ex ante registration requirements

We study platform design in online markets in which buying involves a (nonmonetary) cost for consumers caused by privacy and security concerns. Firms decide whether to require registration at their website before consumers learn relevant product information. We derive conditions under which a monopoly seller benefits from ex ante registration requirements and demonstrate that the profitability of registration requirements is increased when taking into account the prospect of future purchases or an informational value of consumer registration to the firm. Moreover, we consider the effectiveness of discounts (store credit) as a means to influence the consumers’ registration decision. Finally, we confirm the profitability of ex ante registration requirements in the presence of price competition. The online appendix is available at https://doi.org/10.1287/mnsc.2016.2595. This paper was accepted by J. Miguel Villas-Boas, marketing.