Signaling in Dynamic Contests with Heterogeneous Rivals1

Should a challenger face rivals simultaneously or sequentially? If sequentially, should he face weak or strong rivals first? To address these questions, we study signaling in dynamic contests, where a privately-informed challenger faces a sequence of rivals. Against heterogenous opponents, the challenger plays simultaneously rather than sequentially, avoiding information revelation. However, he may prefer sequential battles when rivals are homogeneous. Why? Because the strength of future opponents drives the incentive to signal, whereas the strength of current opponents drives the extent and cost of signaling. We explicitly find the equilibrium for settings where the challenger must play sequentially after choosing the order of his rivals. We show that only pooling and partial-pooling equilibria exist