Social Welfare in Search Games with Asymmetric Information
32 Pages Posted: 24 Mar 2020 Last revised: 14 Sep 2020
Date Written: June 26, 2020
We consider games in which players search for a hidden prize, and they have asymmetric information about the prize’s location. We study the social payoff in equilibria of these games. We present sufficient conditions for the existence of an equilibrium that yields the first-best payoff (i.e., the highest social payoff under any strategy profile), and we characterize the first-best payoff. The results have interesting implications for innovation contests and R&D races.
Keywords: search duplication, decentralized research, social welfare, incomplete information
JEL Classification: C72, D82, D83
Suggested Citation: Suggested Citation