Competition with Information Ranking

This paper studies an information hierarchy among players in a competitive context. The hierarchy specifies a player's observation of her opponents' types, which measure their competitiveness: the higher the player is ranked in the hierarchy, the more types she observes. The players then decide whether to participate in a generally defined competition, the reward from which depends on the type vector of participating players. We identify a robust and unique class of equilibria, where more information from a higher ranking brings both advantage and disadvantage: it typically benefits low-type players while hurts high-type players. In particular, ignorance is bliss for less informed players, who uses their lack of information as a commitment device to deter participation of even more competitive opponents. In extreme cases, a player's ex-ante expected payoff from competition decreases in her information ranking