Diversification and Information in Contests

We study contests with technological uncertainty, where contestants can invest in different technologies of uncertain value. The principal can disclose an informative yet noisy public signal about the merit of each technology, which can focus investments into more promising ones or increase diversification. We characterize the principal’s optimal disclosure of information about the technologies, which depends on her value of diversification, the informativeness of available signals, and the asymmetry of technologies. We also show that a larger prize and more contestants typically decrease the extent of information disclosure